Yes it’s interesting to think that we bought our first house in the mid-90s for 2x my salary at the time (3 years out of college). It doubled in the five years we owned it and has tripled again since then.
I said for their age.
Not necessarily. According to this graph top 1% under the age of 35 makes 225k so even with half a million before taxes and other expenses this couple can’t buy a house in HCOL areas. In SF for example you cannot buy a house in any not really bad neighborhoods for less than 1.5 mil.
The top 1% in a HCOL area like SF certainly make more than $225K. You cannot compare the average income nationally with a specific market. Someone who makes that income in Iowa will not buy a house in SF.
You are missing an important point that’s by age. How many people in their 20th do you know who make 500k? In HCOL FAANG employed 20+ will still make not much more then 300k
With 2 incomes, they will. And why do we feel sorry for people in the 20s not being able to purchase a house? We certainly did not own a house until we are 30, and that was 30 years ago.
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So? 400-600k family income BEFORE tax in HCOL will not buy you 1.5 - 2 million dollars house.
This is ridiculous. Lots of my friends’ kids have done that. I live in the Bay Area.
And I have an adult child and SO in SF unable to buy a house in desirable areas
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Desirability is very subjective. They can certainly find something in most parts of SF, including Richmond, Sunset etc. If you have an income of $600K and cannot afford a $1.5M house, then something is wrong with your spending habit.
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Right? You’re making more money than over 95% of those in your age group - you’ll be ok!
Please move on from income needed to buy a home and back to the OP.
Well, sure there are areas that are desirable by me…but I will never live in one!
I have always lived in a HCOL area (not a SF or NYC high!) and have had to commute into the city. Were my kids in the best schools in the area? No. Did I buy my move-in ready, dream home at age 32? No. Did I buy living room furniture as soon as we moved in? No (that took 4 years). Did I remodel my kitchen? Yes, but that took almost 20 years.
Did our parents help finance it? No. And it never occurred to me that they would (they had already done their job of raising their kids). Would I help my kids? They would never expect it, which is why I would if I could - but it would not be an amount that would change the price range or neighborhood for them (we don’t have that kind of money).
I see kids on House Hunters (yes, I know it it just a TV show 
) saying things like “but it is not my white kitchen”, “it doesn’t have granite”, and “but I want a grand entry way”. So I do wonder if kids need to manage their expectations (dare I say “entitlement”?)
You can find very nice houses in the burbs (desirable areas) of DC that do not cost anywhere near $1.5M. I agree with @cbreeze that if you have an income of $600,000 and can’t afford a $1.5M house, there there is more at play.
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Isn’t the real issue how to save up a downpayment, unless you get help from parents? Saving $300K after tax is going to take a while in a HCOL area, even on a $400K-$600K income, especially if a significant fraction is stock-based, unless your restricted stock does very well, which may be less likely going forward.
We got our downpayment from parents-in-law and paid them back later (mortgage company didn’t ask if it was a loan). But if it needs to be a gift then I doubt many families will be giving the kids hundreds of thousands of dollars for a downpayment.
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One thing to keep in mind is that a lot of people can’t afford a house, even in less desirable areas. Also, people do say, “move somewhere cheaper,” but sometimes cheaper places are cheaper for a reason. Fewer jobs (or fewer high-paying jobs), more crime, etc.
H and I saved for a long time to buy our first house. It was small and in an older neighborhood and it had dated appliances. It was not our dream house and we couldn’t make changes or remodel for a while. But it was what we could afford in an area near our jobs. Now, if we had looked for houses in South Central LA, Barstow, or El Centro, we could have bought much sooner. But, just because I could afford South Central LA doesn’t mean it’s a good place to live or that I should’ve bought there just to own a house.
That said, I do think people do need to temper their expectations on their first house…
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We helped both of our kids purchase homes in the greater SF Bay Area. Both at a tad below the 1M mark.
Both kids lived with us for several years after college. The agreement was anything that they would have spent on room and board was to be banked. Both honored the rule, and went above and beyond in the savings department.
Fast forward. DD is married and living in the area. They have saved additional amounts during their time together. He was on a post doc salary and she worked at a CPA firm. Combined gross annual income was probably around 220K. She gets pregnant and we hire her into the family business. Let’s just say her income dropped. He gets promoted. They start putting in offers on homes. Were very proud and didn’t want to accept help. Finally after losing out on several bids they took our $$…( it was not a lot) won the bid. Great home, little work needed.
DS…also a saver, same scenario as his sister. He also loses several bids but does finally succeed. The home needs a certain amount of work to make it comfortable. We put in about 3X what we gave to DD and put in several moths of sweat and work.
Luckily they bought before the rise in interest rates.
When we look at our kids as objectively as possible, we see responsible adults with the ability to put off short term pleasure (new car, vacations, fancy sports equipment etc) for the purpose of long term gain (a home and a buffer in the bank). They are excellent stewards of what they have been given.
Under discussion now is how much to contribute to the private school educations (starting in pre-K). It is another area where we consider it money well spent.
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Circling back to the original theme of this thread:
My married child and their spouse (the ones in top 5% of earners FOR THEIR AGE) say that many people they know can only buy houses if a) parents give the a large downpayment, or b) parents buy a house for them. And yes, they know people being gifts $1M houses from their parents.
This is what distorts the market. The people paying for the houses are not the people buying them.
We cannot afford to gift them a significant downpayment. Each set of our own parents gave us $10k to help with downpayment, so we had $20k, which helped. Today … lol, that would not even make a dent.
My son and his wife bought a million plus home in DC a few months ago. We did not give them anything for the downpayment and I don’t believe the other family(much better off than us) did either. Luckily, they did not ask for our help as we are not wealthy and are also cheap! 
We did give them a few hundred bucks to get some stuff for the new house.
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DH and I went to three open houses in our 'hood today. The other lookers were interesting. One was a single guy who drove a BMW and clearly had money to spend. Said he used to live in an RV in the Bay Area. I think he’s got lots of tech money, said something about Dell.
The other lookers were families. We live in a great area for families. The most traffic was at the fixer-upper house. Great price point and almost 2,400 sf. I hope one of the families gets it and not another flipper, which is the case with the other two houses we saw.
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Looking at homes within your own price range helps. Many times you can’t count on major help from parents or others. Unless you’ve been told upfront about what others may or may not offer.