Is home ownership still the best bet for young folks?

[MACKTEXAS]

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.

 

[seadoug]

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.

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).

 

[seadoug]

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.

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.