patrick.net

I don't have 300k+ to "plunk down" on a house. I do have enough to buy for cash in say- TX or NC. So I guess I'm sorta' one of those guys. My cash came from busting my ass for years. I make what I'd consider a good income. But that aside I've saved cash from renting cheap, driving the same worn-out ancient beater cars, rarely eating out, picking up furniture from the side of the road, not buying whatever latest gadget exists out there, and so on. So basically just old-fashioned scrimping and saving.

A lot of other people I know fit some of those categories above: They have rich parents who gave them money. They make mega-buxs at some big tech company. They sold a house earlier and have cash to spare from that sale. They're in their 40's or 50's and are just now getting around to buying a house, etc etc.

That said... I also know a lot of people who "own" a house and basically haven't a penny to spare as a result.

edvard2 says

They make mega-buxs at some big tech company.

Tech has been around in SV for a long time, yet like me it took time to actually save up to buy. And yes, dual incomes were also common back then. We are still have insanity in prices running amoke.

fatguy says

Sometimes it seems like everyone but me in the Bay Area has hundreds of thousands in cash to plunk down on houses. Am I really the only one that doesn't?
So, if you don't mind, enlighten me. Where did you get your money, especially those that can throw, say, $300K-500K (or more) on a house.

Im sure the IRS would like to know as well...

For a while, I knew some people who were using the Bank of Mom and Dad for a large part of their down payment, but that calmed down a bit when the Bank of Mom and Dad ran into liquidity issues and required bailout funds, and also realized that their dissolution plan might need additional assets.

Most of the people I know who cashed out big on a house then promptly sunk it into another house, so that didn't always work out the way intended.

A few rank and file Google types did end up with some cash from the stock grants and option grants, but certainly not $300-500K. Maybe more like $120-180K at most, which isn't bad.

For me, none of those have really been an option. It's only #1.

I've been wondering this myself! Homes in my town go on the market and are sold within a week. We're talking $800K+ homes.

6. Male never married. Saved the alimony payments. Never had kids of my own. What does the government estimate it takes to raise one child two, three or more including college? Saved it.
No hermit here, I've led a full life so far on just less than the average annual wage. I'm not alone.

I'm the same as 'fly solo'.
Saved Money PLUS:
5. Bought homes at start of (or before) bubble, then wisely cashed out at peak.

I will pay cash for a house at some point. Renting is making less and less sense as the Feds allow home prices to float down slowly.

Sold my home at 2005, living for 18 years, bot a bigger and better one with less price, ALL CASH!

We are saving up the 20% down payment ourselves. At our current pace, we will have it next year. Having no other debt payments, especially no car payments has allowed us to save a significant amount of money.

It seems like most people I know, around my age, were given money or borrowed money from their parents. Many of them bought during the bubble years. I really don't want to accept any money from my parents or my wife's parents to buy a place. I don't want to be 30+ years old and still relying on my parents, the feeling of financial freedom is important to me. I would certainly never borrow money from them, I think it's really dangerous to mix family and loans. My wife and I are at odds on this issue though, she sees it as the norm to accept money from the parents for help with a home. She thinks my view is jaded, because I think all money, given or loaned, comes with strings, no matter how initially genuine or generous the original intentions.

MAYBE WE SHOULD JUST ROB THE BANKS OF WHAT THEY ROBBED US OUT OF AND THEN WE'LL HAVE THE MONEY.

IT'S TO BAD OUR TAX DOLLARS BAILED EVERYONE BUT OURSELVES OUT.

OBAMA, his family and his cronies and the cronies who puppeteer him are living high on the hog because of our tax dollars. Reminds me of the Tzar Nicholas.

Wow, Patrick--you are awesome! I have been wondering the same thing. I would never come out and ask. Kudos. As to your question: Working very, very hard and living very, very small--the old fashioned way of earning the income: SAVING. What did it take?
~Two full-time working people with one child (at the time)
~High paying jobs (at the time)
~No student loans or other debt
~No asking mommy for money (neither side 'rich') (And it's not their life!)
~Saving the 20% down of 65,000 (at the time) on a 325,000 house in 1986
~Willing to pay 12% interest
~Willing to refinance when it made sense
~Paying down any principle when possible (paid off 6 years ago)
~All just in time for our kids to grow up as WE received steep declines in wages.
It is ridiculous to see the state of home ownership today in California's good neighborhoods. I don't know how people do it. If we have to, we'll rent out a few rooms in our old age--if we live so long!
Thanks for your site!

For me it's about half inheritance from grandparents and half saved income from being longtime DINK (until recently).

Bought a house in 1994 (in SoCal), paid $200-500 extra on the mortgage almost every single month. Sold it in 2008 and cleared 150% more then the original cost of the house. That will be my down payment (expected to be 40-55% of the new house value, when I finally find something).

Other than that, I live a fairly frugal lifestyle. I take my lunch to work 4 days a week. I rarely eat out for any other meal (maybe once a week). I drive a 10 year old car. I do have an expensive hobby. Curtail my that shoe thing that women do. I'd love to have a closet of shoes (Why is that?!) A lot of my discretionary incomes gets converted into aircraft fuel, but I also save about 1/3 of my income every year and hope to be able to retire by 55.

For me: 1, 2 & 5, not 3 & 4

1. Work hard and save. It actually works. I intensely save for 4 years before able to save up $60k for my 1st down payment.
2. Stock - buy low, sell high. Bought Netflix some oil company stocks did help.
3. N/A
4. N/A
5. Bought at 2002, sold at 2005. Cashed in and rented for 5 years. Waited for good price, then buy again. Pocketed 6 figures for my 2nd down payment.

my job as a european gigalo pays very well

Save and don't spend it, and don't invest in the stock market. Keep the money that YOU earned and paid tax on away from the thieves, banksters, Real-a- tors and politicians who try to steal it from you.

KEEP THE EVIL away from your money. Keep the drugs away from the addicts = same thing.

Put it in a pillow...under a mattress...burn it...but keep it away from banksters. HOARD all cash or convert to silver or GOLD metal and watch the slime choke. Force the grifter banksters and Real-a-tors to WORK FOR A LIVING. NO MORE LIES.

AND I CONTINUE TO RENT...until HOUSE prices return to 1997 prices in REAL terms...pay cash and NO REALTOR SCUM.

When a seller---is spitting blood out of his mouth...and begging you to take the house for less than they paid in 1998 ...and no listing agreements..Now they may waste my time by discussing it ...plus I want a new car...new furnishings...as a SPIF to encourage me to buy. CASH IS KING...all else is talk ....so let the grifters choke on their own lies. And here is the front door...and here is the kitchen...LIES. For 6% off the top. NO WAY! NOT WITH MY MONEY.

For my first real estate purchase, I saved and worked hard for years, in the film industry. Living frugally, driving an older car, not traveling, not dining out much, not buying clothes for sh*ts and giggles. Then I used my money to buy a house in the Hollywood Hills at auction and put a big down~payment on it and continued to live frugally. The in the early to mid nineties I bought one, then two houses I fixed up and rented. Then I bought a house in Beverly Hills in '96. by '98 I owned several homes and a few duplexes. I became aware of the real~estate bubble in '03 and decided to start unloading in late '04. By '05 I had liquidated all my real~estate. I traveled around the world for a 2 years, living in Asia and South America (still frugally). I returned to the US and rented until the market collapsed and I've been picking up some real~estate here and there. I pay cash only.

Amen! I applaud and agree with everything you say.

It's good to see not everybody is a sheeple that accepts everything the so-called "professionals" say.

+1

investor90 says

AND I CONTINUE TO RENT...until HOUSE prices return to 1997 prices in REAL terms...pay cash and NO REALTOR SCUM.

investor90 says

Save and don't spend it, and don't invest in the stock market. Keep the money that YOU earned and paid tax on away from the thieves, banksters, Real-a- tors and politicians who try to steal it from you.

KEEP THE EVIL away from your money. Keep the drugs away from the addicts = same thing.

Put it in a pillow...under a mattress...burn it...but keep it away from banksters. HOARD all cash or convert to silver or GOLD metal and watch the slime choke. Force the grifter banksters and Real-a-tors to WORK FOR A LIVING. NO MORE LIES.

investor90 says

When a seller---is spitting blood out of his mouth...and begging you to take the house for less than they paid in 1998 ...and no listing agreements..Now they may waste my time by discussing it ...plus I want a new car...new furnishings...as a SPIF to encourage me to buy. CASH IS KING...all else is talk ....so let the grifters choke on their own lies. And here is the front door...and here is the kitchen...LIES. For 6% off the top. NO WAY! NOT WITH MY MONEY.

@WillyW

Where did you live in Asia?

1 and 2 for me. Starting at Apple in 2001 was luck, saving and not spending was not (until last year my wife and I were dual income no kids but lived off of less than one of our salaries).

what money?

Saved 20% down in 1987, bought for 134000 in CT. Sold for about the same four years later in a down market but with an extra 20000 in equity due to a twelve year mortgage. Bought in a somewhat upper middle class area In 1992 for 215000 for about 2000 sq ft and stayed 18 years, paying that mortgage while living on one decent income raising two kids. Paid off house in about sixteen years. Sold it last November for 295000, rented for six mos. Bought the house we rented for 214000 for 1200 sq ft, downsized. Nice property but have about 30000 of work to do. We are financial ( and political ) conservatives who tend to live a little below our means and stay out of debt as much as possible. Been debt free for about three years. Kids decided college not for them after first year so that helped a lot. So, lots of saving and deferred gratification and financial discipline. Steady job, good income. The kind of things everyone counted on in the fifties. I don't know how you do it on the west coast, nor do I know how our kids will survive, let alOne thrive. My wife and I have a nice life now, but the country seems basically screwed for the forseeable future.

@WillyW
Amazing. I remember many So. Cal friends that faced ruin during the downturn of the early nineties. (Yes, there was a huge drop in price during that time.) Lots of foreclosures, etc. How did you parlay your one property into to several? And then more--? I admire honest, hard work and investment!

Mostly #1, worked and saved. We got a bit from stock options.

We could pay cash for a house, but we're not considering buying. We agree with the premise of the question here: that prices are too high compared to what most people can afford, and therefore are artificial.

Also, the single most lucrative way we've saved (not the only one) has been renting instead of owning our home.

PasadenaNative says

I've been wondering this myself! Homes in my town go on the market and are sold within a week. We're talking $800K+ homes.

I wouldn't automatically assume just because a home is sold it means it is actually being paid for. Private sales can go back and forth to simply show volume.

On the same note I've personally seen condos that have been on the market for months..we're talking maybe 50 months that can taken off for a day and get put back on to reset that "days on the market". The sign selling it was so old it started to be bleached from the sun and the metal poles were rusting!

Same as above. Through a habit of locking in small gains over a prolonged period of time. Buying things in a way to minimize dollars paid in interest to someone else. Buying a modest house and paying it off in 8 years. Driving base model cars and driving them for 10 years. Buying 2 more more properties and paying them off in 30 months. Avoiding putting money at risk in the stock market casino. Modest vacations, don't eat out much , etc. At 50 own 3 properties free & clear + over $500K cash ready to take advantage of opportunities. Best advice I ever got was from a friend in college. "never borrow money to buy anything that depreciates" i.e., cars, dinner on a credit card, vacations, furniture, pretty much anything. Debt is only for things that will gain value.