Is home ownership still the best bet for young folks?

SueBee

SueBee

New Member
Location
Midwest
If living in an area where home ownership is unaffordable, should young family (late 30s) move to where they can buy, providing they have enough savings and income, and can work remotely. My view is that home ownership is still key to security later in life. Thoughts?
 

At the rate housing is costing and rising, yes! My son talked his daughter (single) into buying a home
when she got a settlement from a car accident and her mortgage payment now is $500 a month less than what
the rent is for the same type housing. It may not be near the difference right now, but I am sure it will be
as the years go by if buying now.
 
I think that buying a modest home in a good school district is still a good thing for the average young family.

Where else can you scrape together a few dollars for a down payment but experience price appreciation on the total value of the investment while satisfying the basic need for a place to live and raise a family.

Don’t let the news stories intimidate you and don’t worry about solving the world’s problems just concentrate on finding one comfortable little home that you can afford and enjoy.
 

SueBee said:
If living in an area where home ownership is unaffordable, should young family (late 30s) move to where they can buy, providing they have enough savings and income, and can work remotely. My view is that home ownership is still key to security later in life. Thoughts?
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I agree with you @SueBee. I still think that, if people can, it is best to buy a property rather than rent. I know quite a few people who rent and it's expensive.

Your post is interesting as I was speaking to some retirement aged friends recently and they were saying that they are thinking of selling and renting because, they would not have the expense or hassle of maintaining a property and, if their needs changed, they could easily move. I can't imagine choosing to rent myself but, I can see why they would consider it.
 
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.
 
House price inflation has soared in the UK. My wife and I bought a terraced house in the Forest Gate district of East London, back in 1968, at a cost of £3,000. It sounds laughable but wait. Look at it in percentages, my annual income was £1,200, there was also some commission but in percentages the house cost two and half times my salary.

Looking up the house prices today at where we bought our first home in 1968, properties are changing hands for an average £500,000. A buyer would have to be on an annual income of £200,000 to have a similar two and a half times salary deal that we had.
£200K, dream on, the midian working wage in East London is around £40,000, making today's percentage twelve and a half times salary.
 
Quote
"If living in an area where home ownership is unaffordable, should young family (late 30s) move to where they can buy, providing they have enough savings and income, and can work remotely"

The key points are

1.providing they have enough savings and income.
2.and can work remotely"

The answer is yes.

Even better if they can pay off a mortgage in 15 years. In their 30's Going into retirement mortgage free with savings rebuilt by paying off a mortgage in 15 years will be to their advantage. Who knows what Soc. Sec. payments or Medicare will be when they are able to retire
 
The family I'm referring to has about $80K in savings (silly!), hubby makes $150k, works at home, they have zero debt, even car is paid off.

A few years back I owned a small mobile home in a senior park on US west coast, expensive area, paying space rent of $1100 which continued to go up every year. I sold it for $30K, using that as the down payment on a nice house with full finished basement on half acre, halfway across the country. It was the best decision I ever made. I live exclusively on social security income, have no pension, etc. I have a nice life and everything I need. The PITI mortgage is half what my space rent was.

I try to talk my daughter into moving here, buying a house before even this area is unaffordable. I don't understand the hesitation except hubby's mom owns the small duplex where they rent at very reduced price, about a third of what the mom could get on open market. I feel that's a control tactic on her part. My daughter is often complaining about lack of space where they live...
 
SueBee said:
The family I'm referring to has about $80K in savings (silly!), hubby makes $150k, works at home, they have zero debt, even car is paid off.

A few years back I owned a small mobile home in a senior park on US west coast, expensive area, paying space rent of $1100 which continued to go up every year. I sold it for $30K, using that as the down payment on a nice house with full finished basement on half acre, halfway across the country. It was the best decision I ever made. I live exclusively on social security income, have no pension, etc. I have a nice life and everything I need. The PITI mortgage is half what my space rent was.

I try to talk my daughter into moving here, buying a house before even this area is unaffordable. I don't understand the hesitation except hubby's mom owns the small duplex where they rent at very reduced price, about a third of what the mom could get on open market. I feel that's a control tactic on her part. My daughter is often complaining about lack of space where they live...
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It might be better for them to stay put and see if Mom would sell them the duplex and hold the mortgage. 🤔

Mom wouldn’t have the expense of home ownership but would still have a regular income from the mortgage payments for many years.

As far as the lack of space, the years will fly by and time will quickly take care of that problem.

Like @outlander said, look for an unconventional alternative.
 
You can pay a monthly mortgage payment cheaper than paying rent to a landlord. After paying rent, you have nothing to show for it & no equity built up. The house we had 18-months ago for my SIL could have rented for $1400 per month & the house payment was $645. It had 3 bedrooms, 1 bath, kitchen, dining area & living room with an attached garage. The only thing I would have added on to it would have been a bath just off of the main bedroom. Outside had a fenced in back yard with a large covered back patio off the dining room.

The big thing is to buy a house you can afford & not try to keep up with what the the Jones's buy. IMO, you need to think about what you really need in a home. Do you really need a guest room with it's own bath that is used might be used a week or two out of the entire year? Are you going to cook in the kitchen that you think should be big enough that you can entertain all of your guests in that one spot? In the end, do you really want to have to downsize when all of the kids move out & you are left with a huge empty house? Just me, but the bigger the house, the more you have to keep clean.

I love watching the shows where people are doing remodeling on their house to enlarge what they have. I really like watching "Love It or List It" & hear what the couple, who usually are at odd with what they each want, has to say.
 
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The cost of renting does usually go up all the time, but so does the cost of homeowners insurance. Also, it's getting harder and harder in some states to even find companies who'll insurance your home; the company we've had insuring our house for several years informed us they wouldn't be renewing us, and we could only find one other company who will and it's going to cost double. So sometimes renting sounds good to me.
 
Aunt Bea said:
I think that buying a modest home in a good school district is still a good thing for the average young family.

Where else can you scrape together a few dollars for a down payment but experience price appreciation on the total value of the investment while satisfying the basic need for a place to live and raise a family.

Don’t let the news stories intimidate you and don’t worry about solving the world’s problems just concentrate on finding one comfortable little home that you can afford and enjoy.
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I agree. I'll add that they shouldn't approach home-buying as an investment. The only dividend they should take into account is that their home will be paid-off at a point in their lives when their income is likely to decrease significantly.
 
SueBee said:
If living in an area where home ownership is unaffordable, should young family (late 30s) move to where they can buy, providing they have enough savings and income, and can work remotely. My view is that home ownership is still key to security later in life. Thoughts?
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I think it would be a good financial move, but not to an area that is losing population (home prices might not grow as much) or is likely to have extreme weather-related damage (I.e., increasing insurance costs).
 
HoneyNut said:
I think it would be a good financial move, but not to an area that is losing population (home prices might not grow as much) or is likely to have extreme weather-related damage (I.e., increasing insurance costs).
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Another important consideration to population loss is that it also means loss of tax revenue. A slum waiting to happen.
 
It is IF the young person in question is willing to buy a modest home that he/she can afford RIGHT NOW.

None of this, "well, we'll buy this overpriced home and scrape by because in a couple of years it will have increased in price so much we can refinance it and get the monthly mortgage payment down." What if it doesn't increase enough?

Also, most of the "young people" I talk to today want it ALL....and they want it NOW...the 3-car garage, the pool, the "glamour room", the wine cellar, the 5 bedrooms and 4 baths. They all talk about their "forever home". Very few people actually start out in their "forever home".
 
jujube said:
It is IF the young person in question is willing to buy a modest home that he/she can afford RIGHT NOW.

None of this, "well, we'll buy this overpriced home and scrape by because in a couple of years it will have increased in price so much we can refinance it and get the monthly mortgage payment down." What if it doesn't increase enough?

Also, most of the "young people" I talk to today want it ALL....and they want it NOW...the 3-car garage, the pool, the "glamour room", the wine cellar, the 5 bedrooms and 4 baths. They all talk about their "forever home". Very few people actually start out in their "forever home".
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Agreed. Got one question, though: what is a "glamour room"? :unsure:
 
officerripley said:
Agreed. Got one question, though: what is a "glamour room"? :unsure:
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Oh, apparently it's the hot new thing. Usually it's using or converting a spare bedroom into a Glamour Room that's dedicated to your wardrobe and makeup. Special racks for the large collection of shoes and purses. A makeup area with lights. Etc, etc.

My glamour room consists of about six square inches on my bathroom counter where resides two lipsticks, a 10-year old brow powder container, and a pair of tweezers for the chin hairs. "Glamour" moved out about 30 years ago and left no forwarding address.

Shoes and purses? Not enough to deserve a special place.... They have to be content with a corner of my small definitely unglamouress closet.
 
SueBee said:
The family I'm referring to has about $80K in savings (silly!), hubby makes $150k, works at home, they have zero debt, even car is paid off.

A few years back I owned a small mobile home in a senior park on US west coast, expensive area, paying space rent of $1100 which continued to go up every year. I sold it for $30K, using that as the down payment on a nice house with full finished basement on half acre, halfway across the country. It was the best decision I ever made. I live exclusively on social security income, have no pension, etc. I have a nice life and everything I need. The PITI mortgage is half what my space rent was.

I try to talk my daughter into moving here, buying a house before even this area is unaffordable. I don't understand the hesitation except hubby's mom owns the small duplex where they rent at very reduced price, about a third of what the mom could get on open market. I feel that's a control tactic on her part. My daughter is often complaining about lack of space where they live...
Click to expand...
I have lived in five states because of either mine or my husband‘s career. Moving just because houses are less expensive is not always desirable. I could buy a nice house for what I spent on my small condo, but then I’d be living in a different state somewhere that I don’t really want to be. There’s always a trade-off.

You have to like the weather, the people in general and most people would prefer an adequate amount of things to do. In two of the five states I lived in. I had great difficulty finding my tribe and was very happy to leave when we were able to. All places are definitely not created equal.
 
Teacher Terry said:
I have lived in five states because of either mine or my husband‘s career. Moving just because houses are less expensive is not always desirable. I could buy a nice house for what I spent on my small condo, but then I’d be living in a different state somewhere that I don’t really want to be. There’s always a trade-off.

You have to like the weather, the people in general and most people would prefer an adequate amount of things to do. In two of the five states I lived in. I had great difficulty finding my tribe and was very happy to leave when we were able to. All places are definitely not created equal.
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So true. Something I've said online to young women is that if where they live matters greatly to them, to try not to fall in love with and partner up with an alpha because if you do, you are going to either live where that alpha wants to and nowhere else or never hear the end of why they want to move. Just sayin'.
 
I don't know.
In the first place, you can be sued into orbit. Even with insurance a lawsuit is a hassle.
In the second place, taxes and maintenance nullify much of the investment potential.
In the third place, home ownership tends to make you a prisoner of your premises in the first place. And selling can be difficult.

(The years pass quickly. I've got myself hemmed in here. To move, to sell would be an incredible job, more than I can handle.
So here I sit, when I'd like to be mobile.
On the other hand, it's okay, I'll just stay home. To be out in the thick of things feels very dangerous to me.)
 
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I would rather own than rent. I can do whatever I want to the place (within reason). Also, having no HOA is a bonus. But, even with no mortgage, there is still property tax, upkeep, and insurance cost. Stop paying the tax and see how much longer you own the castle. That being said, I remember an old saying “In the long run, we all rent.”
 

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