Is home ownership still the best bet for young folks?

I don't know what prices are where this couple is looking, but I'm in central Texas, and just now looked up the cost of renting a 2 bedroom apartment at the nicest complex nearby and it is $1225 / month (water included).

An average house like mine here with almost 2000 square feet costs at least $250,000, and that would not be a new house. It may need work.

After a downpayment in the $50,000 range (which would use up over half of this couple's $80K in saving) the mortgage would be in the $200,000 range. At a fixed 7% interest rate, the principal and interest payment alone would be approximately $1331 / month, and that's only the start, since they will probably want taxes and insurance included in the note, which will make the payment rise significantly, plus they'll owe another $100 for the monthly water bill since it's not included like it is at the apartment.

Plus, I pay $60 a week to have the yard mowed. I got a new water line 2 years ago and it cost a large sum, then there are unknown other repairs and upkeep; so it's really a "blank check" on what may be spent. And set aside an extra $2500 for the insurance deductible when hail damages the roof. We get a lot of that in Texas.
 

MACKTEXAS said:
Don't know if you've seen today's jobs report. Although the figures are preliminary, they could be a trend going forward. A bad jobs report signals a weakening economy, which influences the housing market, placing a downward pressure on home prices, and a decrease in buyer demand.
Click to expand...
Also a possible decrease in interest rates, which could also help young buyers.

In Dallas, a few years ago a For Sale sign would go up in a yard and would be gone the next week. Our neighbors sold their home a couple of years ago at a ridiculous price that I would have never dreamt of paying. Now there are properties that have been sitting on the market for months. This bodes well for buyers.

I found this article from today very interesting.

Mortgage rates just fell to an 11-month low. Here's why (and what buyers should be doing now).
 
MACKTEXAS said:
I don't know what prices are where this couple is looking, but I'm in central Texas, and just now looked up the cost of renting a 2 bedroom apartment at the nicest complex nearby and it is $1225 / month (water included).

An average house like mine here with almost 2000 square feet costs at least $250,000, and that would not be a new house. It may need work.

After a downpayment in the $50,000 range (which would use up over half of this couple's $80K in saving) the mortgage would be in the $200,000 range. At a fixed 7% interest rate, the principal and interest payment alone would be approximately $1331 / month, and that's only the start, since they will probably want taxes and insurance included in the note, which will make the payment rise significantly, plus they'll owe another $100 for the monthly water bill since it's not included like it is at the apartment.

Plus, I pay $60 a week to have the yard mowed. I got a new water line 2 years ago and it cost a large sum, then there are unknown other repairs and upkeep; so it's really a "blank check" on what may be spent. And set aside an extra $2500 for the insurance deductible when hail damages the roof. We get a lot of that in Texas.
Click to expand...
You raise a great point. The maintenance costs of an older home (even 10 years old) can be astronomical. Ours is 26 years old and we've replaced both water heaters, both A/C units, the refrigerator (twice) and the washer/dryer, among other items. Fortunately it was all done prior to my retirement because if they all went again we'd probably need to move.
 

seadoug said:
In Dallas, a few years ago a For Sale sign would go up in a yard and would be gone the next week. Our neighbors sold their home a couple of years ago at a ridiculous price that I would have never dreamt of paying. Now there are properties that have been sitting on the market for months.
Click to expand...
Yes, the house across the street from me was offered at $186,000 last year (well below market) and did not sell. The owners finally took the sign down and decided to stay. The upward sprial in prices eventually has to end, or the day will come when no one can afford to buy.

People who buy a home today should be reasonably sure they plan to stay there a long time.
 
MACKTEXAS said:
I don't know what prices are where this couple is looking, but I'm in central Texas, and just now looked up the cost of renting a 2 bedroom apartment at the nicest complex nearby and it is $1225 / month (water included).

An average house like mine here with almost 2000 square feet costs at least $250,000, and that would not be a new house. It may need work.

After a downpayment in the $50,000 range (which would use up over half of this couple's $80K in saving) the mortgage would be in the $200,000 range. At a fixed 7% interest rate, the principal and interest payment alone would be approximately $1331 / month, and that's only the start, since they will probably want taxes and insurance included in the note, which will make the payment rise significantly, plus they'll owe another $100 for the monthly water bill since it's not included like it is at the apartment.

Plus, I pay $60 a week to have the yard mowed. I got a new water line 2 years ago and it cost a large sum, then there are unknown other repairs and upkeep; so it's really a "blank check" on what may be spent. And set aside an extra $2500 for the insurance deductible when hail damages the roof. We get a lot of that in Texas.
Click to expand...
Good summary of all the main expenses involved in owning a home.

Then there’s the physical labour in maintaining a home, updating if needed, even buying the small items to make these things happen. AC or heat in an apartment is minimal compared to some of large homes. Home ownership isn’t free so everything has to be factored in whether there’ll be a profit down the line.
 
Jules said:
Then there’s the physical labour in maintaining a home
Click to expand...
Yes - thanks for that, and that part concerns me as much as the prices. I do minor home repairs myself, but the older I get, the more I will need to hire done. Where I used to live, I mowed my own yard, but where I am now is a large corner lot with an inclline, and anyone I hire requires that I agree to them using a riding mower. I could buy one, and mow it myself but they are expensive - then there's the cost of maintaining one of those, and also having to struggle with Texas heat, when I have less stamina now than I used to.
 
I think the era of every person owning a standard home is almost gone. If you can afford it, that's great.

But the price of homes, the cost of utilities, insurance costs, property taxes, maintainance costs, repair costs ect., is now out of reach for the average American. And it's only getting more expensive, it's just not economically sustainable for many. And it seems that most of the younger people that are trying to do it are working way too hard and sacrificing way too much:(
 
Pepper said:
No ownership. The rich will own your home and you will rent from them. In the near future, only the very wealthy will own things. Not US. Not YOU. THEY will own everything. It's heading in that direction.
Click to expand...
You make a very valid point. I’ve read that corporations are buying up properties to use as rentals, or on occasion, resale.
 

You must log in or register to reply here.

Back
Top