Financing 2m+ homes

My family has a 3m house, and pretty much everyone I know does. I've been looking at houses for sale for fun and saw a 2.7 mill house 3 minutes away from me that is so gorgeous to me. my absolute dream house.

I'm 18 and know shit about financing. and i cant talk to me family because its very awkward and my dad would give some sort of comical answer. how do people afford these homes though? What in the absolute fuck would be your income? Is 500k/y enough to afford a home like this? Is it best to pay the down then mortgage the rest monthly or do people pay all the money down? If so, how in the fuck do so many people afford million dollar houses to have that much just sitting around? Seems like so many people these days have houses in the millions, but what is their salary/net worth to afford these?

Are you an ausfag? What suburb are you in? North-West Sydney?

nah, im an amerifat

Well I know in Australia our interest rates are at 1.5% and inflation is at like 1.2%. So it costs .3% to borrow in real terms. Banks lend from 3.5 to 4.2%. You can also negative gear here, meaning your mortgage payments reduce your tax by a 1:1 ratio. These incentives and interest rates mean that any family with two half-decent earning parents can basically afford a 3m+ house in Australia.

I'll give you an example, my father used to earn 400k+ here, and 150k+ would go to tax. So as our current asset value is at minimum 2.5 million, we can pay the mortgage repayments with our tax- a 3.75 million dollar loan is the maximum we can go with the 'negative gearing' incentives, aka, we have to spend our actual take home money on mortgage repayments after that. So, we can afford a 6M dollar house without denting our take home income,

The thing is, after the dotcom bubble, and the GFC, the Australian government basically subsidised housing; First home buyers grant, negative gearing applying to all housing basically, and allowing Chinese buyers in.

So, to recap, my dad's fairly big Aussie salary allows us a 6 million dollar house, with no change to our take-home income. On top of that, say, we could afford 7-7.5M with sacrificing some of our own money that would normally not be spent and go to savings.

My mum doesn't even work, and we can afford an 8 million dollar house. Does that sound a bit retarted to you? It should.

No one can afford the houses, rather, the houses are expensive due to the effect of government policy and intervention, and one day, I know in Australia we are literally a year or two away from it, panic sellings begin and the bull market reverses.

In USD, my dad's 290k salary would make us afford a 5.5M+ house. In no sense is that rational, nor sustainable.

Welcome to the redpill of finance; Every cunt's fucked.

So you think the housing market will crash soon? what would happen, would housing prices just tank? could that be a good thing to snag a cheap house when prices are low?

most people buying those are on their third or fourth or fifth house. You buy a cheap house, pay it off and then use that money as a down payment on something that costs twice as much.

say get yourself a starter home for $900k and pay it down in 15 years. Sell it and take the million plus you now have to buy a $2 mil house. And so on.

that way your payment doesn't go up but the value of your house keeps increasing and your equity builds tax-free.

it's the murrican way. If you cap out what you can buy in your area you just start buying second and third homes and renting them out. Eventually you cash out and retire like a god in Mississippi or some other third-world country.

Sounds about right. All the homes in my neighborhood are between 1 and 2 mil, and most aren't primary residences. Well, there some people who grew up here and never moved out of their parents place, but other than them.

>in Mississippi or some other third-world country
Lol

the other thing to remember is those houses probably weren't worth $2 million when they bought them. So they may have paid much less than that. Prices go up.

Yes, I do think so in Australia, and prices will tank, over a longer term though. More like a depression, just long and extended downturn. It is a good time to buy, but banks won't lend as easily and you will need a very good record of finance and salary to be able to make a bank want to lend to you.

Same thing after dotcom; People like Bill Clinton encouraged subprime loaning, increases the overall housing market, euphoric investors overextend, and shoddy derivatives crumble and the system is shown to be a fugazzi and ponzi scheme.

Also, in a recession, there is plenty of uncertainty about work and salary. Ask your parents if they remember the dotcom or gfc and discuss how it affected them. I don't know about American policy and demographics as much as I do Australian, but there are warning signs in place here. Take a look at the image; It is the Australian version of subprime. People don't actually pay back their mortgage, and the trend is increasing. Attached: 600B in 'subprime' or lazy loans, unsustainable, and downright degenerate loans. Our GDP is 1.5 Trillion AUD. I can go into technicals and show you how more than 10% of our monetary value is locked in shit loans, but you should go find statistics more relevant to America. What state are you in?

Attached is why the government wants to keep the housing market here afloat, because our economy has no actual production nor innovation. So housing is subsidised to give confidence in investors.