How Many Years of Your Life Will Your House Cost You?
9th October 2017
“Of course that’s not how mortgages actually work. It’s much worse than that”, he writes in a wryly funny piece, exploring the wide range in the accessibility of home ownership across the geography of the U.S. Expanding on the (overly optimistic) annual salary/house price comparison, he found that “the typical ratio of median home value to the median income is 1:3”.
My rule-of-thumb is that you can afford a house that costs twice your annual income.
I have no idea where I came up with that — perhaps some vague recollection from my youth — but it works out pretty well.
October 10th, 2017 at 11:05
Our first house cost only a few thousand more than a year’s income, but that was thirty-nine years ago. Now we pay more in income taxes every year than what our first house cost. I’m not mathematically astute enough to do the inflation-adjusted numbers, so the fact is pretty much meaningless, but still amusing. 🙂