Value Buy
Senior Associate
Joined: Dec 20, 2010 17:57:07 GMT -5
Posts: 18,680
Today's Mood: Getting better by the day!
Location: In the middle of enjoying retirement!
Favorite Drink: Zombie Dust from Three Floyd's brewery
Mini-Profile Name Color: e61975
Mini-Profile Text Color: 196ce6
|
Post by Value Buy on Dec 10, 2019 6:57:13 GMT -5
Interesting statistics by state to show what it takes to be called middle class in America. Surprised how low of an income could be considered middle class as well as the upper end number to still be considered middle class. Most states have an over $100,000 variance between the bottom and top number. Also interestingly enough they list what percentage of the top 20% wage earners earn in the state's total earnings income. The percent to total number is less than what many democrats seem to use in their arguments about earnings discrepency in America and why they should be paying much higher tax rates. Many states were in high 40's to low 50's percentages of total income although I did not check out every state. Even California was only in the low 50's number...... www.msn.com/en-us/money/personalfinance/income-it-takes-to-be-considered-middle-class-in-every-state/ss-BBXr5NL?li=BBnbfcL#image=1
|
|
bean29
Junior Associate
Joined: Dec 19, 2010 22:26:57 GMT -5
Posts: 9,886
|
Post by bean29 on Dec 10, 2019 9:48:35 GMT -5
Wisconsin
> Household income range for middle class: $23,501 - $115,798 > Median family income: $76,814 (23rd highest) > Middle class share of Wisconsin income: 47.7% (10th largest) > Richest 20% share of Wisconsin income: 48.6% (8th smallest) > Cost of living in Wisconsin: 7.6% less expensive than than U.S. avg.
So if we make more than this we are upper middle class? It sure doesn't feel like we are anything but middle class. One wonders how in the world someone making $23,501 can be classified as middle class - and states like New York and California had low end numbers in the 20's. So if you work full time and make 10 and hour, you are middle class? How did they come up with their figures?
|
|
bean29
Junior Associate
Joined: Dec 19, 2010 22:26:57 GMT -5
Posts: 9,886
|
Post by bean29 on Dec 10, 2019 9:52:49 GMT -5
I went back to look at how they got their numbers:
So, it has nothing to do with the income you need to live comfortably. I am going to go back to look at that link.
|
|
justme
Senior Associate
Joined: Feb 10, 2012 13:12:47 GMT -5
Posts: 14,618
|
Post by justme on Dec 10, 2019 9:57:15 GMT -5
This "middle class" is just a statistical statement. And varies. The Pew Research Center defines it quite differently from this one.
This particular one is just showing you the range of the incomes from 2/5 to 4/5. It has no bearing on whether someone in the 2/5 quintile actually can afford what most call a middle class life. All it does is layout income from least to highest, split it into 5 groups, cut out the lowest group and the highest group, and say viola! here's your middle class!!
It's just a statistical breakout of income distribution, nothing more.
|
|
bean29
Junior Associate
Joined: Dec 19, 2010 22:26:57 GMT -5
Posts: 9,886
|
Post by bean29 on Dec 10, 2019 9:58:48 GMT -5
Here is the income you would need in my state to avoid Poverty (from one of their links):
Wisconsin > Annual cost of living (family of 2): $46,795 (14th lowest) > Annual housing costs (family of 2): $8,024 (19th lowest) > Annual food costs (family of 2): $5,457 (7th lowest) > Median family income: $76,814 (23rd highest) > Families earning less than $10,000: 2.6% (10th lowest)
|
|
Miss Tequila
Distinguished Associate
Joined: Dec 19, 2010 10:13:45 GMT -5
Posts: 20,602
|
Post by Miss Tequila on Dec 10, 2019 10:01:01 GMT -5
Pennsylvania
> Household income range for middle class: $24,900 - $122,690
That is a huge range in income. I live in a fairly LCOLA and even here, I can't imagine being considered middle class making less than $25k a year. I do think it is a livable wage (you can get an apartment with heat and water included for $600 or less a month) but I certainly wouldn't consider it a middle class income.
|
|
bean29
Junior Associate
Joined: Dec 19, 2010 22:26:57 GMT -5
Posts: 9,886
|
Post by bean29 on Dec 10, 2019 10:08:30 GMT -5
Min. annual income to be in the top 20%: $112,356 per household (24th lowest) > Income controlled by highest 20% of earners: 48.6% (8th lowest) > Min. annual income to be in the top 5%: $195,948 per household (18th lowest) > Median household income: $60,773 (23rd highest) > Cost of living: 7.6% less expensive than U.S. avg.
These figures would put us very close to the 5%, and let me just say, there is not way. We have no extra $$, and don't live like the well off people we know.
Maybe when DD finishes college, but right now - we are not saving enough for retirement.
|
|
NastyWoman
Senior Associate
Joined: Dec 24, 2010 20:50:37 GMT -5
Posts: 14,233
|
Post by NastyWoman on Dec 10, 2019 11:32:21 GMT -5
Pennsylvania > Household income range for middle class: $24,900 - $122,690 That is a huge range in income. I live in a fairly LCOLA and even here, I can't imagine being considered middle class making less than $25k a year. I do think it is a livable wage (you can get an apartment with heat and water included for $600 or less a month) but I certainly wouldn't consider it a middle class income. How about CA? Household income range for middle class: $29,198 - $143,870 → $29k is living in poverty and I mean that in the traditional sense of the word.
This is a totally useless report/article IMO
|
|
djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 74,870
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Dec 10, 2019 11:46:44 GMT -5
Pennsylvania > Household income range for middle class: $24,900 - $122,690 That is a huge range in income. I live in a fairly LCOLA and even here, I can't imagine being considered middle class making less than $25k a year. I do think it is a livable wage (you can get an apartment with heat and water included for $600 or less a month) but I certainly wouldn't consider it a middle class income. How about CA? Household income range for middle class: $29,198 - $143,870 → $29k is living in poverty and I mean that in the traditional sense of the word.
This is a totally useless report/article IMO
you can check it by running the numbers for some Podunk like Inyo County:
livingwage.mit.edu/
|
|
bean29
Junior Associate
Joined: Dec 19, 2010 22:26:57 GMT -5
Posts: 9,886
|
Post by bean29 on Dec 10, 2019 11:49:48 GMT -5
I guess that there are statistically so many people living in poverty now that poverty is now common for middle America. So we have to quit aspiring to be "Middle Class" and aspire to be in the top 10-20% of Americans. (It is even difficult to believe that I am living in the top 10% - I feel like an imposter, and I probably am - when it comes time to retire, I fear it will be an "Emperor who has no Clothes situation).
|
|
Tiny
Senior Associate
Joined: Dec 29, 2010 21:22:34 GMT -5
Posts: 13,357
|
Post by Tiny on Dec 10, 2019 12:24:13 GMT -5
I tend to use of Median Income - 10K per household as the baseline for Middle Class income up to Median Income + 50K as the top for Middle Class income. With that income there should be enough $$ for shelter (utilities/phone, food, clothes,etc), transportation (vehicle, gas, insurance, repairs/maint), some long term savings, some fun. It becomes a squeeze if there are kids.
2 minimium-ish wage workers can usually get to the Median Income for a household ($15 * 2080[26 40hr work weeks] = $31,200) but the problem is that their incomes may or maynot go up over the course of their "careers". Meaning the only way to increase income is to take on more work hours OR attempt to move into a "career path" with ever increasing pay.
That's what's different... A lifelong string of jobs in retail or a service industry doesn't have the same income trajectory as lifelong low-ish paying jobs from back in the "Good Old Days" where entry level jobs usually led to a "career path" that included higher pay and better more challenging work (climbing the ladder) OR low-ish paying jobs where there was no "career path or ladder" included other benefits for longevity - ever increasing pay for doing the same job, a pension/healthcare, a guaranteed job (think Union jobs).
My dad worked one of those "good old day" jobs - increasing pay for the same work (if you stuck with it for a lifetime with one employer) coupled with a pension/benefits and nearly guaranteed employment. This type of career/income path isn't so popular these days (outside of civil service jobs) .
|
|
justme
Senior Associate
Joined: Feb 10, 2012 13:12:47 GMT -5
Posts: 14,618
|
Post by justme on Dec 10, 2019 12:41:11 GMT -5
I tend to use of Median Income - 10K per household as the baseline for Middle Class income up to Median Income + 50K as the top for Middle Class income. With that income there should be enough $$ for shelter (utilities/phone, food, clothes,etc), transportation (vehicle, gas, insurance, repairs/maint), some long term savings, some fun. It becomes a squeeze if there are kids. 2 minimium-ish wage workers can usually get to the Median Income for a household ($15 * 2080[26 40hr work weeks] = $31,200) but the problem is that their incomes may or maynot go up over the course of their "careers". Meaning the only way to increase income is to take on more work hours OR attempt to move into a "career path" with ever increasing pay. That's what's different... A lifelong string of jobs in retail or a service industry doesn't have the same income trajectory as lifelong low-ish paying jobs from back in the "Good Old Days" where entry level jobs usually led to a "career path" that included higher pay and better more challenging work (climbing the ladder) OR low-ish paying jobs where there was no "career path or ladder" included other benefits for longevity - ever increasing pay for doing the same job, a pension/healthcare, a guaranteed job (think Union jobs). My dad worked one of those "good old day" jobs - increasing pay for the same work (if you stuck with it for a lifetime with one employer) coupled with a pension/benefits and nearly guaranteed employment. This type of career/income path isn't so popular these days (outside of civil service jobs) . The Pew Center uses 2/3 of median to 2x median for their guidelines. Similar to yours
|
|
tcu2003
Senior Member
Joined: Dec 31, 2010 15:24:01 GMT -5
Posts: 4,939
|
Post by tcu2003 on Dec 10, 2019 13:57:02 GMT -5
Here is my state’s:
Kansas > Household income range for middle class: $22,891 - $112,790 > Median family income: $74,042 (25th lowest) > Middle class share of Kansas income: 46.4% (25th smallest) > Richest 20% share of Kansas income: 50.0% (25th smallest) > Cost of living in Kansas: 10.0% less expensive than than U.S. avg.
|
|
tcu2003
Senior Member
Joined: Dec 31, 2010 15:24:01 GMT -5
Posts: 4,939
|
Post by tcu2003 on Dec 10, 2019 13:58:12 GMT -5
And here’s what it takes to be “rich” here:
Kansas > Min. annual income to be in the top 20%: $111,928 per household (23rd lowest) > Income controlled by highest 20% of earners: 50.0% (25th lowest) > Min. annual income to be in the top 5%: $201,686 per household (24th lowest) > Median household income: $58,218 (21st lowest) > Cost of living: 10.0% less expensive than U.S. avg.
|
|
tcu2003
Senior Member
Joined: Dec 31, 2010 15:24:01 GMT -5
Posts: 4,939
|
Post by tcu2003 on Dec 10, 2019 13:59:19 GMT -5
And poverty.poor data:
Kansas > Annual cost of living (family of 2): $47,280 (15th lowest) > Annual housing costs (family of 2): $7,724 (13th lowest) > Annual food costs (family of 2): $5,750 (21st lowest) > Median family income: $74,042 (25th lowest) > Families earning less than $10,000: 2.8% (18th lowest)
|
|
Tiny
Senior Associate
Joined: Dec 29, 2010 21:22:34 GMT -5
Posts: 13,357
|
Post by Tiny on Dec 10, 2019 14:15:58 GMT -5
This "middle class" is just a statistical statement. And varies. The Pew Research Center defines it quite differently from this one. This particular one is just showing you the range of the incomes from 2/5 to 4/5. It has no bearing on whether someone in the 2/5 quintile actually can afford what most call a middle class life. All it does is layout income from least to highest, split it into 5 groups, cut out the lowest group and the highest group, and say viola! here's your middle class!! It's just a statistical breakout of income distribution, nothing more. Yeah, It shows that those in the ranges 2/5 thru 4/5 account for about 45% of each States income - while those in the 5/5 range account for about 50% of each states income. that seems like a pretty big gap between Middle Class and the Top 20% (Upper Class?)
|
|
pooks
Familiar Member
Joined: Mar 11, 2017 16:45:43 GMT -5
Posts: 625
Today's Mood: Angry
|
Post by pooks on Dec 10, 2019 14:17:31 GMT -5
Idaho
Middle Class
Idaho
> Household income range for middle class: $23,654 - $116,549 > Median family income: $65,987 (11th lowest) > Middle class share of Idaho income: 47.5% (14th largest) > Richest 20% share of Idaho income: 48.7% (11th smallest) > Cost of living in Idaho: 7.0% less expensive than than U.S. avg.
Rich
Idaho
> Min. annual income to be in the top 20%: $103,736 per household (12th lowest) > Income controlled by highest 20% of earners: 48.7% (11th lowest) > Min. annual income to be in the top 5%: $184,634 per household (10th lowest) > Median household income: $55,583 (15th lowest) > Cost of living: 7.0% less expensive than U.S. avg.
I do not consider 23K household income middle class. Not even close.
|
|
djAdvocate
Member Emeritus
only posting when the mood strikes me.
Joined: Jun 21, 2011 12:33:54 GMT -5
Posts: 74,870
Mini-Profile Background: {"image":"","color":"000307"}
|
Post by djAdvocate on Dec 10, 2019 14:59:53 GMT -5
Idaho Middle Class Idaho > Household income range for middle class: $23,654 - $116,549 > Median family income: $65,987 (11th lowest) > Middle class share of Idaho income: 47.5% (14th largest) > Richest 20% share of Idaho income: 48.7% (11th smallest) > Cost of living in Idaho: 7.0% less expensive than than U.S. avg. Rich Idaho > Min. annual income to be in the top 20%: $103,736 per household (12th lowest) > Income controlled by highest 20% of earners: 48.7% (11th lowest) > Min. annual income to be in the top 5%: $184,634 per household (10th lowest) > Median household income: $55,583 (15th lowest) > Cost of living: 7.0% less expensive than U.S. avg. I do not consider 23K household income middle class. Not even close. I think that most people here have concluded that the bottom number is about 2-3x too low. the median number is probably pretty close to "middle class".
|
|
sesfw
Junior Associate
Today is the first day of the rest of my life
Joined: Dec 21, 2010 15:45:17 GMT -5
Posts: 6,268
|
Post by sesfw on Dec 11, 2019 10:44:35 GMT -5
Here is Arizona
Household income range for middle class: $24,518 - $120,810
> Median family income: $69,981 (16th lowest)
> Middle class share of Arizona income: 46.6% (24th largest)
> Richest 20% share of Arizona income: 49.9% (23rd smallest)
> Cost of living in Arizona: 3.6% less expensive than than U.S. avg.
I agree this is a huge spread of income for 'middle class' but I guess it's where you live in the state.
Some of the 'classier' areas have higher sales/property taxes and other areas are quite a bit lower
|
|
Tiny
Senior Associate
Joined: Dec 29, 2010 21:22:34 GMT -5
Posts: 13,357
|
Post by Tiny on Dec 11, 2019 14:14:19 GMT -5
Is one of the Hallmarks of Middle Class the ability to afford a house (or condo/townhouse)?
I would think housing prices would have to be in 100k range or lower for them to be affordable by the lower end "household income range for Middle Class" incomes.
|
|
Value Buy
Senior Associate
Joined: Dec 20, 2010 17:57:07 GMT -5
Posts: 18,680
Today's Mood: Getting better by the day!
Location: In the middle of enjoying retirement!
Favorite Drink: Zombie Dust from Three Floyd's brewery
Mini-Profile Name Color: e61975
Mini-Profile Text Color: 196ce6
|
Post by Value Buy on Dec 12, 2019 9:54:35 GMT -5
Okay I admit the number for middle class is wonky. Let's look at actual income percentage of the richest 20% in each state. Let's look at California. Plenty of billionaires and multi millionaires, and yet they only account for 52.3 % of the income in the state
California
> Household income range for middle class: $29,198 - $143,870
> Median family income: $86,165 (13th highest)
> Middle class share of California income: 44.8% (4th smallest)
> Richest 20% share of California income: 52.3% (4th largest)
> Cost of living in California: 14.8% more expensive than than U.S. avg.
I picked California because they are the largest population state. Not even sure $143,000 should be the median amount for California rather than $86,000. You could pick NJ, NYS, Florida or Texas if you want. California millionaires will not make any difference in thr outcome of monetary differences between the classes in the longterm. What happened to 10% controlling 80% of the money? Possessions included maybe, income, no. Some billionaires have tremendous income one year, and not nearly as much the following years. Do they get a tax credit in down years to make up the losses?
Sanders and Warren as well as most of the people running for President claim the billionaires can pay for most of the programs they want to implement. Obviously they do not want to just take income but to confiscate actual personal possessions too. First they came for the billionaires. Then they came for the millionaires
then the middle class.
|
|
busymom
Distinguished Associate
Why is the rum always gone? Oh...that's why.
Joined: Dec 25, 2010 21:09:36 GMT -5
Posts: 28,217
Mini-Profile Background: {"image":"https://cdn.nickpic.host/images/IPauJ5.jpg","color":""}
Mini-Profile Name Color: 0D317F
Mini-Profile Text Color: 0D317F
|
Post by busymom on Dec 12, 2019 10:12:49 GMT -5
That's a pretty broad range for "middle class". More likely, they didn't want to offend anyone.
|
|
chiver78
Administrator
Current Events Admin
Joined: Dec 20, 2010 13:04:45 GMT -5
Posts: 38,385
|
Post by chiver78 on Dec 12, 2019 10:42:50 GMT -5
Massachusetts
> Household income range for middle class: $27,443 - $135,222
> Median family income: $101,548 (the highest)
> Middle class share of Massachusetts income: 45.7% (15th smallest)
> Richest 20% share of Massachusetts income: 51.6% (10th largest)
> Cost of living in Massachusetts: 7.9% more expensive than than U.S. avg.
I'm a little surprised at the last bullet point there, but I suppose the dirt cheap real estate in Western MA comparative to anything east of Worcester brings that average down some.
|
|
bean29
Junior Associate
Joined: Dec 19, 2010 22:26:57 GMT -5
Posts: 9,886
|
Post by bean29 on Dec 12, 2019 11:08:27 GMT -5
Is one of the Hallmarks of Middle Class the ability to afford a house (or condo/townhouse)? I would think housing prices would have to be in 100k range or lower for them to be affordable by the lower end "household income range for Middle Class" incomes. Interesting comment, and it is pretty hard to find a house for less than $130,000 in a half way decent neighborhood here. DS's GF just bought a house for $130,000 on just here income. 130000/3=43,333 - and the neighborhood is not horrible but it is marginal. I would prefer it not be in the city of Milwaukee, but que sera, sera--even in the city of Milwaukee, it is hard to find a house for $90,000 - maybe a condo - but you have to be really careful buying into a condo b/c you can get stuck on unpaid maintenance and taxes - you need to be sure they have a very strong condo association.
|
|
Tiny
Senior Associate
Joined: Dec 29, 2010 21:22:34 GMT -5
Posts: 13,357
|
Post by Tiny on Dec 12, 2019 11:12:53 GMT -5
Okay I admit the number for middle class is wonky. Let's look at actual income percentage of the richest 20% in each state. Let's look at California. Plenty of billionaires and multi millionaires, and yet they only account for 52.3 % of the income in the state Ok, I'm not the best at math - the numbers all swim around inside my head. Let's play pretend. Let say the total income for a State is 1,000,000,000 (it's a nice round number). Let's say there are 1,000,000 people in the state. So you can check my math: 20% of 1,000,000 people = 200,000 50% of 1,000,000,000 = 500,000,000 So, 200,000 have 500,000,000 (or 2500 per person if it's split evenly) and 800,000 have the other 500,000,000 (or 625 per person if it's split evenly) What if the top 20% were feeling particularly benevolent and opted to forgo 100,000,000 so the 200,000 would have 400,000,000 (or 2000 per person if it's split evenly) They'd still have WAY more than the 800,000. How much would their lifestyles change?
|
|
bean29
Junior Associate
Joined: Dec 19, 2010 22:26:57 GMT -5
Posts: 9,886
|
Post by bean29 on Dec 12, 2019 11:15:36 GMT -5
You know, I was staring at Chiver's post, and it just jumped out at me that the share of income allotted to the "poor" or lower classes is extremely small.
MA: 2.7 AZ: 3.5 ID: 3.8 JS: 3.6 WI: 3.7
I wonder how many people are in each class for the "share of income" they hold?
ETA: Which I think is similar to the point that Tiny is making above.
|
|
Tiny
Senior Associate
Joined: Dec 29, 2010 21:22:34 GMT -5
Posts: 13,357
|
Post by Tiny on Dec 12, 2019 12:08:24 GMT -5
Is one of the Hallmarks of Middle Class the ability to afford a house (or condo/townhouse)? I would think housing prices would have to be in 100k range or lower for them to be affordable by the lower end "household income range for Middle Class" incomes. Interesting comment, and it is pretty hard to find a house for less than $130,000 in a half way decent neighborhood here. DS's GF just bought a house for $130,000 on just here income. 130000/3=43,333 - and the neighborhood is not horrible but it is marginal. I would prefer it not be in the city of Milwaukee, but que sera, sera--even in the city of Milwaukee, it is hard to find a house for $90,000 - maybe a condo - but you have to be really careful buying into a condo b/c you can get stuck on unpaid maintenance and taxes - you need to be sure they have a very strong condo association.I agree about potential extra expenses of condo/townhouses and the need to understand the finances of the HOA AND what the HOA actually does with the $$. But, for the most part, houses and condos have many of the same expenses/maintenance - just in a different format (HOA fees versus paying out of pocket for a repair/replace thing.). My nephew recently bought a small (800sq foot) 140K house on a 45K salary (he was gifted the down payment as well as $$ for repairs/fix ups and had free labor for many of the repairs/fix ups: painting, new carpet, new water heater, new toilet, new sinks/faucets, drain repairs, new light fixtures, and a whole bunch of other odds and ends of stuff. -- all the stuff previous owners didn't do/lived with work arounds) He's gonna have to foot the bill for for HVAC expenses soon (20 year old furance/15 yo AC). On the bright side the 25yo roof was replaced before he bought it. Without all the family support (labor and $$)- he would have had a very rough financial time "affording" this small, not quite move in ready house. I'm not sure how someone with a smaller income could afford anything other than renting with room mates.
|
|
bean29
Junior Associate
Joined: Dec 19, 2010 22:26:57 GMT -5
Posts: 9,886
|
Post by bean29 on Dec 12, 2019 12:24:34 GMT -5
Interesting comment, and it is pretty hard to find a house for less than $130,000 in a half way decent neighborhood here. DS's GF just bought a house for $130,000 on just here income. 130000/3=43,333 - and the neighborhood is not horrible but it is marginal. I would prefer it not be in the city of Milwaukee, but que sera, sera--even in the city of Milwaukee, it is hard to find a house for $90,000 - maybe a condo - but you have to be really careful buying into a condo b/c you can get stuck on unpaid maintenance and taxes - you need to be sure they have a very strong condo association.I agree about potential extra expenses of condo/townhouses and the need to understand the finances of the HOA AND what the HOA actually does with the $$. But, for the most part, houses and condos have many of the same expenses/maintenance - just in a different format (HOA fees versus paying out of pocket for a repair/replace thing.). My nephew recently bought a small (800sq foot) 140K house on a 45K salary (he was gifted the down payment as well as $$ for repairs/fix ups and had free labor for many of the repairs/fix ups: painting, new carpet, new water heater, new toilet, new sinks/faucets, drain repairs, new light fixtures, and a whole bunch of other odds and ends of stuff. -- all the stuff previous owners didn't do/lived with work arounds) He's gonna have to foot the bill for for HVAC expenses soon (20 year old furance/15 yo AC). On the bright side the 25yo roof was replaced before he bought it. Without all the family support (labor and $$)- he would have had a very rough financial time "affording" this small, not quite move in ready house. I'm not sure how someone with a smaller income could afford anything other than renting with room mates. What I meant was if there are a large number of unoccupied units or units with unpaid taxes - your share of the taxes and maintenance can grow from just your own to include the unoccupied units share - it happened with some condos in the last real estate crash, where although their own taxes were current, they had to pay the taxes on forclosed units or have the whole complex face forclosure. It is also a concern if you are buying into a new development - you are supposed to wait to pull the trigger until they reach a certain % of occupancy.
|
|
dondub
Senior Associate
The meek shall indeed inherit the earth but only after the Visigoths are done with it.
Joined: Jan 16, 2014 19:31:06 GMT -5
Posts: 12,110
Location: Seattle
Favorite Drink: Laphroig
|
Post by dondub on Dec 12, 2019 13:43:27 GMT -5
As a RE investor since 1976 and having spent 29 years as a mortgage loan officer, I would categorically warn anyone away from a condo. Doesn’t mean they won’t work in the right circumstances but I have too many horror stories that show the incredible risk.
|
|
Tiny
Senior Associate
Joined: Dec 29, 2010 21:22:34 GMT -5
Posts: 13,357
|
Post by Tiny on Dec 12, 2019 14:16:03 GMT -5
I agree about potential extra expenses of condo/townhouses and the need to understand the finances of the HOA AND what the HOA actually does with the $$. But, for the most part, houses and condos have many of the same expenses/maintenance - just in a different format (HOA fees versus paying out of pocket for a repair/replace thing.). My nephew recently bought a small (800sq foot) 140K house on a 45K salary (he was gifted the down payment as well as $$ for repairs/fix ups and had free labor for many of the repairs/fix ups: painting, new carpet, new water heater, new toilet, new sinks/faucets, drain repairs, new light fixtures, and a whole bunch of other odds and ends of stuff. -- all the stuff previous owners didn't do/lived with work arounds) He's gonna have to foot the bill for for HVAC expenses soon (20 year old furance/15 yo AC). On the bright side the 25yo roof was replaced before he bought it. Without all the family support (labor and $$)- he would have had a very rough financial time "affording" this small, not quite move in ready house. I'm not sure how someone with a smaller income could afford anything other than renting with room mates. What I meant was if there are a large number of unoccupied units or units with unpaid taxes - your share of the taxes and maintenance can grow from just your own to include the unoccupied units share - it happened with some condos in the last real estate crash, where although their own taxes were current, they had to pay the taxes on forclosed units or have the whole complex face forclosure. It is also a concern if you are buying into a new development - you are supposed to wait to pull the trigger until they reach a certain % of occupancy. Ah! I see. It's really a case of researching the HOA documents and having a savvy HOA board. ADDED: And considering the quality/age/upkeep of the actual property being purchased. (but, in theory, one would do that when purchasing a house as well). I know the housing crash was unique ALL the players in the game had NO money - the home owner, their lender, the HOA, the city/county. So, I did hear stories about what you describe. But, in general for distressed properties, the HOA can/will put a lien on the property so they get paid when the property sells. So, it depends on the HOAs board members, and their lawyer/accounting/finance ability. Of course that doesn't help them if they need the money now not at some unknown point in the future. Generally, the mortgage holding bank will cough up the $$ for back taxes when the property is sold. Sometimes the city/county that the taxes are due to will suck it up and take less $$ - in order to get the property back on the tax rolls. I would think cities/counties would have some flexibility to make a "deal" versus immediately jumping to foreclosure (especially if they think the property is unlikely to be sold.... it's better to get some tax money than no tax money.) But, of course, it depends on the property and the HOA board. My experience during the housing crash was: I bought a short sale condo at the bottom of the housing market (it was a bloodbath for the owner's lender). The condo is in a subdivision with 80 other condos. When I purchased almost 1/2 the units were NOT paying hoa fees. (short sales/foreclosures or the owners had just stopped paying the dues). The lack of dues paying units (for several years) didn't change the quarterly dues. It did effect how much care was given to the things the hoa fees covered (the pool, the roads, the street lights, the landscaping, and how strongly the rules were enforced. as there wasn't much money. Owners are responsible for the exterior of their units (I guess they are townhouses and not condos... I say tomato you say tomahto. ) Generally the bank holding the mortgage is responsible for back taxes (they actually own the property). The terms of my purchase made the seller's bank responsible for the unpaid property taxes. The condo association had a lien? or something where they wanted X dollars in past due HOA payments and late fees before the unit could be sold. The seller's bank was suppose to be responsible for paying those as well... but at closing they played the "no, we're not paying the amount the HOA wants we're only paying the back taxes" card. I and the Realtor negotiated lowering the amount the HOA wanted (they dropped all the accumulated late fees) and then got the seller's bank to agree to pay 1/2 of the remaining amount owed to the HOA - I paid the other 1/2 and agreed to take care of all the "exterior violations" within 3 months of the purchase. (things like the fence needed to be stained, the gate needed to be repaired. All things I would have done anyway.) I really wanted this condo. It was and continues to be a good deal. I also bought a foreclosed uninhabitable house at the bottom of the housing market. Fannie Mae owned the house and paid 3 years of back taxes at the time of sale (or maybe the city/county waived some of them in order to get the house back on the tax rolls) I know the city waived several years of uncollected water/trash bills as well as a fist full of fines (for blight and other stuff) as part of the sale. Whew.. there's alot of hoops to jump thru/bureaucracy/people to get n agreement when buying distressed properties. And I just went and bought another sort of distressed house (it's actually the nicest "crappy" house I've ever purchased!) I so need a new hobby.
|
|