Locked out...
How long would you need to save every dollar you earn to amass a downpayment in San Francisco?
It depends on your earnings capacity...
-- Undergraduate degree (all schools): 5.9 years
-- Graduate degree (all schools): 4.9 years
-- Ivy League degree: 3.9 years
What about New York?
-- Undergraduate degree (all schools): 3.2 years
-- Graduate degree (all schools): 2.7 years
-- Ivy League degree: 2.2 years
What about in a 'low-cost-of-living' place, like Atlanta?
-- Undergraduate degree (all schools): 1.9 years
-- Graduate degree (all schools): 1.5 years
-- Ivy League degree: 1.2 years
We estimate that, even in these low-cost-of-living places, the downpayment burden (relative to income) is at least 40% higher vs. the early 1980s when interest rates approached 20%.
----- What's the point? ----
We regularly see two groups talking past each other on this issue:
Group 1: Our students and alumni
"I make $200K a year, but will I ever own a decent home?"
Group 2: Employers, partners, MDs, and parents
"I paid 18% forty years ago. It's always harder than you think. Don't worry."
Today's young professionals face an unprecedented reality. Unless you inherit a windfall, the only way to get into the game is to outrun your peers with respect to income growth.
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