Reddit User Asks, 'How Do So Many People Afford Multi-Million Dollar Homes?' Says Even Six-Figure Salaries 'Mean Nothing In This Area'

Last week, a Reddit user sparked a heated discussion in the r/RealEstate subreddit by asking, “How do so many people afford multimillion dollar homes?” The person, living in a very high-cost-of-living (VHCOL) area in Southern California, shared their struggle to afford a home in a market where even livable houses cost around $3 million. Despite earning a six-figure salary and having a partner who is a law firm partner, they feel stuck. “Everyone says it's doctors and lawyers who live in these areas … but we still can't afford it,” the post reads.

Hundreds of people chimed in to share their thoughts. The responses painted a revealing picture of how people manage to live in these exclusive neighborhoods. 

Don't Miss:

• Unlock the hidden potential of commercial real estate — This platform allows individuals to invest in commercial real estate offering a 12% target yield with a bonus 1% return boost today!
• Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — you can become an investor for $0.80 per share today.

Bank of Mom and Dad

A recurring theme was parental financial assistance. "There is almost zero chance anyone young could buy a mid-to-high-end SoCal home today without generational wealth," a person said. Another one bluntly stated that the Bank of Mom and Dad “is a hell of a bank!” and many shared stories of parents either gifting their kids down payments or outright buying the homes for them.

For example, one user from Lake Tahoe shared, "My realtor often deals with young clients whose parents buy the house and then serve as the bank to their kids, who make payments to them on the loan." Others explained how family wealth cushions the financial blow. “A lot of parents helped their kids buy houses after they realized their kids were planning to move out of state to somewhere more affordable and take the grandkids with them," one commenter explained.

See Also: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." These high-yield real estate notes that pay 7.5% – 9% make earning passive income easier than ever.

Tech and High-Earning Jobs

Another major factor is, of course, high-paying jobs in tech and other lucrative industries. One user who works in tech said they know several people in their late 20s and early 30s making $300,000 to $600,000 a year, with some pulling in over $1 million. "To your point, there are many people with a lot of money out there," they noted.

Stock options and other forms of equity also play a significant role. One commenter described a couple working at Amazon since 2013 who amassed substantial wealth through stock appreciation. "Tech made so many people so much money," they added.

Trending: This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, with minimum investments as low as $100 for properties like the Byer House from Stranger Things.

Generational Wealth and Timing

Timing also came up repeatedly as a deciding factor. A user described a family friend who bought their first home 25 years ago and traded up over time, leveraging appreciation. "She couldn't do that if she bought today. But she bought 25 years ago, then sold, bought another, then sold and bought her current home,” and now lives in a $6 million home.

Generational wealth magnifies this advantage. One user shared, "I know three couples who only got their homes because grandma died and left them a fat inheritance. The whole ‘doctor/lawyer’ thing is kind of outdated now. Even high earners are struggling unless they have family money backing them up."

Trending: The Ascent Income Fund from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. Earn a 1% return boost on your first EquityMultiple investment when you sign up here (accredited investors only).

Making Sacrifices

Some users talked about people’s financial sacrifices to live in these areas. One person explained how they made a 50% down payment on their Hermosa Beach home with help from family and by maxing out retirement contributions in their early 20s. Another shared, "Some people make themselves very house-poor, resulting in a lot of financial stress."

Others highlighted the influence of Prop 13 in California, which caps property tax increases for longtime homeowners. One person noted that if you've owned for decades, your taxes stay low, making it easier to stay put even as home values skyrocket.

And finally, as one commenter put it, "Desirable places a.k.a VHCOL areas, attract rich people from all over the world. You’re competing with rich people globally, not just rich people from CA."

Read Next:

• During market downturns, investors are learning that unlike equities, these high-yield real estate notes that pay 7.5% – 9% are protected by resilient assets, buffering against losses.
• Arrived Home's Private Credit Fund’s has historically paid an annualized dividend yield of 8.1%*, which provides access to a pool of short-term loans backed by residential real estate with just a $100 minimum.