Biglaw associates: What class year were you when you bought a house? How expensive of a house did you get? Forum

[Anonymous User]

Bought my first property when I was a stub year (at the $160k starting salary).
HCOL area, bought a condo for around $600k.
Outstanding student loan debt was around $175k at the time.

Years later I'm in-house counsel, married, and combined we have around $250k in student loans outstanding (wife is a doctor and we both paid for 100% of our post-grad studies).
Household income is around $500k post-bonus, pre-equity.
Same HCOL area, bought a house a few years ago for $1m, did some minor renovations, now worth around $1.7m.
Also bought a vacation home in a nearby resort town for around $600k that we rent out most of the year except for when we're using it.

Looking to buy the forever home ($3m - $4m) in the two years or so depending on how my equity shakes out...

[Anonymous User]

The 30/30/3 rule doesn't make sense to me in the era of low mortgage rates. I pay $5600 in mortgage/tax/insurance for my $1.2m home. According to the first 30 rule, I could afford that on $18,667/mo or $224k/yr. But at $224k, the 3 rule says I could only afford a $672k home - almost half as much as what I spent. It seems like the first 30 rule is always duplicative of and subsumed by the 3 rule. It really only makes sense when you're talking about 10%+ mortgage rates, but even then why use both? Don't they get at the same thing?

This Financial Samurai article explains the 30/30/3 rule, which does say that with lower mortgage interest rates, you can expand the multiple to 5, so it's really more of the "30/30/3-5" rule. (Disclaimer: Not advertising the blog, just linking the article where the rule is from)

Sure, but isn't that just adjusting 3 to make in consistent with the 30, which hasn't changed? It still sounds duplicative to me, and as that article shows it's less accurate than just looking at what your monthly mortgage will be. Maybe it's just needed to help give mathematically illiterate people an easy way to ballpark the housing prices they should be looking at (since it's harder to reverse-engineer a price range from a mortgage/tax/insurance calculation).

Anyway, rant over.

[Anonymous User]

Purchased as a third-year associate in a HCOL location. HHI 550k; $1.7M house, peak pandemic low interest rates; house has appreciated $800K. We went for the forever home and don’t feel stretched and are very happy with the decision because our neighborhood would be out of budget had we waited.

[Anonymous User]

as a NY associate, how are people buying houses? The biglaw salary doesn’t amount to much after taxes, rent, loans, health insurance, etc.

I don’t personally see how this job could allow someone to purchase any meaningful property here until years 5+ at a minimum. Condos and co-ops want at least 20% down, so you’re looking at hundreds of thousands in down payment

[Anonymous User]

as a NY associate, how are people buying houses? The biglaw salary doesn’t amount to much after taxes, rent, loans, health insurance, etc.

I don’t personally see how this job could allow someone to purchase any meaningful property here until years 5+ at a minimum. Condos and co-ops want at least 20% down, so you’re looking at hundreds of thousands in down payment

Depends on your situation, plus things have changed. One my buddies from law school is married to another high earner. They bought a sub-million dollar unit in Bed Stuy when we were first years. Most people in this thread probably bought some years ago, when RE prices were lower than today and interest rates were favorable. Those times could well come again in the medium-term relative to a normal person's career, although that's obviously not very helpful to someone who wishes they could buy now.

[Wanderingdrock]

as a NY associate, how are people buying houses? The biglaw salary doesn’t amount to much after taxes, rent, loans, health insurance, etc.

I don’t personally see how this job could allow someone to purchase any meaningful property here until years 5+ at a minimum. Condos and co-ops want at least 20% down, so you’re looking at hundreds of thousands in down payment

Depends on your situation, plus things have changed. One my buddies from law school is married to another high earner. They bought a sub-million dollar unit in Bed Stuy when we were first years. Most people in this thread probably bought some years ago, when RE prices were lower than today and interest rates were favorable. Those times could well come again in the medium-term relative to a normal person's career, although that's obviously not very helpful to someone who wishes they could buy now.

Also, while 20% might be demanded by condo boards and co-ops in NY, most people in America don't put 20% down on their homes. While some do 0-10% through various military or other programs, some just pay the PMI until they've got their equity up above 20% and then they refinance (though this may be getting less cost-effective as interest rates rise). In the Biglaw world, many firms have relationships with banks which allow you to finance on favorable terms, including under-20% down payments.

[Anonymous User]

as a NY associate, how are people buying houses? The biglaw salary doesn’t amount to much after taxes, rent, loans, health insurance, etc.

I don’t personally see how this job could allow someone to purchase any meaningful property here until years 5+ at a minimum. Condos and co-ops want at least 20% down, so you’re looking at hundreds of thousands in down payment

I bought as a fourth year after saving ~$300k over my first few years. The salary goes up quickly, and if you hit all your bonuses and live cheaply, you can save pretty fast. Then again, I don't live in NYC (no stupid city tax), didn't have much debt (had a big scholarship), paid $2k in rent for the first 2.5 years, hit some extra bonuses due to hours (which also left me with less time to spend), and put almost all that I saved into my house. If you make it a priority it's doable, but you might be looking at a cheaper house to start.

[Anonymous User]

To the NYC associate, go spend some time out of NYC, and you'll understand. I bought my place in Chicago for $500k as a junior associate. I just hopped on Zillow, and a place in comparable condition (i.e. newly renovated), with comparable amenities, and in a comparable part of town in NYC would cost me $1.6 million. Combine that with the fact that I'm making the same as a NYC associate but also pay less taxes, and it's not too hard to figure out how other major market associates are affording homes far earlier in their careers.

[Anonymous User]

as a NY associate, how are people buying houses? The biglaw salary doesn’t amount to much after taxes, rent, loans, health insurance, etc.

I don’t personally see how this job could allow someone to purchase any meaningful property here until years 5+ at a minimum. Condos and co-ops want at least 20% down, so you’re looking at hundreds of thousands in down payment

We're looking now at Westchester suburbs. Two mid-level biglaw salaries to make it work (HHI: ~$750k). Only way we can swing it for the desirable westchester neighborhoods but there are cheaper options further north and into Jersey (ie homes under $1mm).

[Anonymous User]

as a NY associate, how are people buying houses? The biglaw salary doesn’t amount to much after taxes, rent, loans, health insurance, etc.

I don’t personally see how this job could allow someone to purchase any meaningful property here until years 5+ at a minimum. Condos and co-ops want at least 20% down, so you’re looking at hundreds of thousands in down payment

We're looking now at Westchester suburbs. Two mid-level biglaw salaries to make it work (HHI: ~$750k). Only way we can swing it for the desirable westchester neighborhoods but there are cheaper options further north and into Jersey (ie homes under $1mm).

Where exactly do you want to be in Westchester where you can't find a home for less than $1m? There are plenty of 3-4 brs up on Zillow that would be fine for a family for >$1m.

[Anonymous User]

as a NY associate, how are people buying houses? The biglaw salary doesn’t amount to much after taxes, rent, loans, health insurance, etc.

Not sure what this means--BL salary is plenty, even after taxes, loans (if you even have them), and health insurance. Rent is not a carveout because it is substituted with mortgage payment.

[Anonymous User]

Year Purchased: End of 2020 as a new 6th year
House: $710k, 5br/3.5bth, ~4,600 sq ft
Mortgage: 20% down at 2.525% (30-year fixed)
HHI: ~$465k
No debt

We could have gone for more house, but this was plenty for our needs and is very much in the range where I can decide to bail on biglaw whenever I'm tired of putting up with it.

[Anonymous User]

as a NY associate, how are people buying houses? The biglaw salary doesn’t amount to much after taxes, rent, loans, health insurance, etc.

Not sure what this means--BL salary is plenty, even after taxes, loans (if you even have them), and health insurance. Rent is not a carveout because it is substituted with mortgage payment.

It’s plenty if you want to take a vacation or buy a purse. It’s not plenty if you’re trying to buy real estate in New York City and have no other financial resources.

[Anonymous User]

as a NY associate, how are people buying houses? The biglaw salary doesn’t amount to much after taxes, rent, loans, health insurance, etc.

Not sure what this means--BL salary is plenty, even after taxes, loans (if you even have them), and health insurance. Rent is not a carveout because it is substituted with mortgage payment.

It’s plenty if you want to take a vacation or buy a purse. It’s not plenty if you’re trying to buy real estate in New York City and have no other financial resources.

Can we please differentiate between being able to afford real estate and being able to afford the real estate you want? Sure, getting a spacious 3br in a desirable neighborhood is out of the question, but it's not like biglaw associates are priced out of the entire market. And if you buy early and build equity, it's easier to buy something bigger/better later on.

[mwells_56]

Year Purchased: End of 2020 as a new 6th year
House: $710k, 5br/3.5bth, ~4,600 sq ft
Mortgage: 20% down at 2.525% (30-year fixed)
HHI: ~$465k
No debt

We could have gone for more house, but this was plenty for our needs and is very much in the range where I can decide to bail on biglaw whenever I'm tired of putting up with it.

What market are you in that $710k got you 4,600 square feet? That's enormous. Unless you have like 4 kids and 3 dogs there's no way anyone would need more house than that. I grew up in ~3,000 square foot house and it was big enough that me, my brother, and both of my parents could each go to a different zone of the house and not interact for hours.

[thisismytlsuername]

Imagine having a 4600 square foot McMansion and still thinking you could have gone for "more house." This world is gonna burn and we deserve it.

[Anonymous User]

2.5 fixed--- Bravo.

[replevin123]

Imagine having a 4600 square foot McMansion and still thinking you could have gone for "more house." This world is gonna burn and we deserve it.

If only 710k, it likely is very McMansion-y even in the cheaper COL areas. 710k for that size means likely skipping on building materials, landscaping and grounds, and design. Also to really furnish and decorate rather than just having large rooms with mostly open space would add up too. Maybe there's an indoor pool or bowling alley.

[Anonymous User]

This thread is devolving into (1) people from secondary/tertiary markets bragging about how much home they got for less than $1m and (2) NYC associates freaking out about how expensive buying their dream apartment is. I doubt OP cares much about what is McMansiony or how big a house they should get. What is helpful to see is what people are actually spending given their HHI.

What I gather is that at market you can absolutely afford something in the $600k-$1.2m range within the first 3-6 years, especially if you make it a priority. You can save enough for 20% down in that timeframe (especially if you don't have loans), but you apparently don't have to. What that much $$$ will buy you depends heavily on your city and what lifestyle you want (burbs or city). Anybody disagree with this?

[Anonymous User]

Can we move on to same questions but for vacation homes?

[thisismytlsuername]

This is a completely pointless thread, because how much you can afford to spend on a house is entirely dictated by your personal circumstances. There's no "if you're a third year making a market salary, you can afford to spend up to $750k" rule, nor can there be, because it will depend on where you live, how much debt you had when you graduated, if you have an SO, how much money they make, how much money you spend on other shit, and 100 other variables.

So of course this thread has devolved into people talking about how rich they are or how poor they feel (anyone making market in NYC is rich, regardless of how poor they feel).

[Anonymous User]

Year Purchased: End of 2020 as a new 6th year
House: $710k, 5br/3.5bth, ~4,600 sq ft
Mortgage: 20% down at 2.525% (30-year fixed)
HHI: ~$465k
No debt

We could have gone for more house, but this was plenty for our needs and is very much in the range where I can decide to bail on biglaw whenever I'm tired of putting up with it.

What market are you in that $710k got you 4,600 square feet? That's enormous. Unless you have like 4 kids and 3 dogs there's no way anyone would need more house than that. I grew up in ~3,000 square foot house and it was big enough that me, my brother, and both of my parents could each go to a different zone of the house and not interact for hours.

In the mountain west region. And it's actually 3 kids, 2 dogs, and a cat (which we got against my will).

[Anonymous User]

This is a completely pointless thread, because how much you can afford to spend on a house is entirely dictated by your personal circumstances. There's no "if you're a third year making a market salary, you can afford to spend up to $750k" rule, nor can there be, because it will depend on where you live, how much debt you had when you graduated, if you have an SO, how much money they make, how much money you spend on other shit, and 100 other variables.

So of course this thread has devolved into people talking about how rich they are or how poor they feel (anyone making market in NYC is rich, regardless of how poor they feel).

Right but the data points themselves (i.e., what people actually do make/spend) are relevant. If someone says they bought a $2m house on $350k HHI I'd like to ask them how the hell they are doing that, just as much as I want to ask someone buying a $600k house on $400k HHI what they plan to do in life and why they made that decision. What I don't care about is how many BRs you have or what it costs to get a 3BR in NYC.

[Anonymous User]

Some NYC perspective:

- Single, bought a ~$600k 1bd condo with all the fixin's end of first year biglaw (very little in loans and had 25k of savings coming out of LS). Did a $1500/month sublet with friends while I was getting the down payment together.
- 10% down, 3.2% mortgage, PMI of ~$200/month until loan-to-value paid to 80%, taxes are low because of abatement, ~$200/month common charges.

All in about a $3,000/month payment. Depending on the equities market, possible that I could have come out ahead by investing the down payment, renting for cheap and investing the leftovers, however it's likely that I would have rented increasingly more expensive places over the years, as my peers have, so I think I'm going to come out beating what I would have made by renting + Vanguard maxing (I'm still making monthly investments, and more than I'd be able to if I was in some $4000+ a month doorman setup). And it just feels nice to be diversified into RE.

I don't recommend this to very junior people unless they're reasonably sure they want to stay in NYC biglaw/high paying inhouse for the foreseeable future (hard to know as a junior, you may just get fired, etc.).

[Anonymous User]

as a NY associate, how are people buying houses? The biglaw salary doesn’t amount to much after taxes, rent, loans, health insurance, etc.

I don’t personally see how this job could allow someone to purchase any meaningful property here until years 5+ at a minimum. Condos and co-ops want at least 20% down, so you’re looking at hundreds of thousands in down payment

We're looking now at Westchester suburbs. Two mid-level biglaw salaries to make it work (HHI: ~$750k). Only way we can swing it for the desirable westchester neighborhoods but there are cheaper options further north and into Jersey (ie homes under $1mm).

Where exactly do you want to be in Westchester where you can't find a home for less than $1m? There are plenty of 3-4 brs up on Zillow that would be fine for a family for >$1m.

We're looking at Rye, Scarsdale, Bronxville, Larchmont, etc. We're looking for a 4 bedroom and trying to be close to a train station and in the city within an hour.