Millennials and homeownership

[violagirl]

We are 40 but when we bought our first house in 2002, income of 75k, very small student loan (maybe 7k) we were looking in the 90-100k range. No help from parents. Nor did we expect any. First house was 115k. 2 bedroom, 950 square feet. But it was brand new. We learned a lot about the building process.

Second home in about 2009 was 280k, income around 110k. It was a stretch for us, at the top of where we were willing to pay (not the top of what the bank was willing to give), however before we purchased it I spent several months with a family budget "as if" we were in that house so we adjusted. 

Sold a couple of years ago and have been renting. Salaries around 190k. Finally pulled the trigger to build a house. Around 550k. This mortgage will also be a bit of  a stretch but still doable (have been living with "new" house budget for last 6 months)  We drive cars that are paid off. We like to go on vacation but only do so if we have the money saved up for it. I have to remind myself that the neighbours who are driving the Audis likely have large car payments to go with them. My husband loves renting, but personally I hate it. I just want my own space and my own yard. When we sold the house we did contemplate buying a semi-detached and living almost mortgage free, but after living in a townhouse with close neighbours, I'm willing to spend the money to have some space from the neighbours. 

The good thing about the market we live in is - you can still buy a house for 90k - and you can buy a house for 900k. The value of houses doesn't really appreciate that much. We presume we will be lucky to break even on any eventual sale of our house. I would rather have a market like that than one where you need a million dollars to buy a fixer upper. 

What we are also seeing is an influx of millennial immigration from HCOL areas of the country. One of my juniors at work is buying his first house and the look on his face when he and his wife realized that they would actually be able to afford a nice place here. It was something they didn't even consider where they were from.   

[Poptart]

I think I'm still considered a millennial and I don't think I'll be able to afford to buy in my area. I was looking online and a one bedroom condo in my area cost $325,000, I live in a suburb of Los Angeles where a one bedroom apartment costs $1,800 in rent. In order to be able to buy I'd have to move 60 miles out from where I currently live and add a three hour commute to my life.

[phil5185]

Jun 8, 2019 16:19:49 GMT -5 Poptart said:

I think I'm still considered a millennial and I don't think I'll be able to afford to buy in my area. I was looking online and a one bedroom condo in my area cost $325,000, I live in a suburb of Los Angeles where a one bedroom apartment costs $1,800 in rent. In order to be able to buy I'd have to move 60 miles out from where I currently live and add a three hour commute to my life.

I noted in Post 1 that many millennials appear to be locked into HCOL areas - NY, Boston, PNW, Austin, CA.  My generation (WW2) we did the opposite - ie, relocated to regions for better jobs, better housing. What locks you to the LA region? 

[Poptart]

Jun 8, 2019 16:56:35 GMT -5 phil5185 said:

Jun 8, 2019 16:19:49 GMT -5 Poptart said:

I think I'm still considered a millennial and I don't think I'll be able to afford to buy in my area. I was looking online and a one bedroom condo in my area cost $325,000, I live in a suburb of Los Angeles where a one bedroom apartment costs $1,800 in rent. In order to be able to buy I'd have to move 60 miles out from where I currently live and add a three hour commute to my life.

I noted in Post 1 that many millennials appear to be locked into HCOL areas - NY, Boston, PNW, Austin, CA.  My generation (WW2) we did the opposite - ie, relocated to regions for better jobs, better housing. What locks you to the LA region? 

Two things, I like my job and there's a good chance that I'll be able to become a part owner of the agency that I currently manage in the next few years, I'm also the caretaker for my sister who has serious medical issues, all her doctors are here and I don't want to uproot her because she's currently getting great care and this might sound stupid but I don't want to move her to an area with colder weather, this past winter was probably one of the coldest I remember and it was hell on her, she spent almost three months unable to really do much because the cold weather aggravated her RA.

[Ava]

I'm not a millennial but a Gen X. However, in certain aspects my life resembles millennials because I had a late start in the U.S. when I immigrated here. So I started school at the same time they did and I graduated with them.

Buying a condo wasn't difficult for me. It was just before the complete crash of 2008 and I got a mortgage with zero down. I had to pay closing costs and that was it. I got approved for 2.5 times my yearly income, which was peanuts at that time. The reason I decided to buy was because rent was costing me 50 percent of my monthly income. I said, if I'm going to spend that much on a roof over my head, it better be something I own.

With the amount I was approved for, I could only buy in a very economically depressed, far from everything, nothing to do small city. I still think it was the right decision at that time, and I enjoyed my condo for years. At this point, I am  really wanting to leave and move somewhere closer to work and with better attractions nearby. The thing is, my income is now 3 times what it was then, and I still can't afford to move to a nice area close to work.

I think who your parents are makes a huge difference in where you land. I hate to compare myself to others, but there is this young guy who started working at the company the same summer as me. He graduated university the same time as me, and his parents paid his student loans as a graduation gift. Then he did an MBA while working there, just like I did. But he was living with his parents and cash flowing his education, while I continued to take out loans. Now he's bought himself a really nice condo 15 minutes from work, while I continue to live an hour away. Such is life. I'm glad for him and he's a really nice guy. He had great opportunities and certainly took advantage of them. I wish I had had those opportunities too, but it didn't happen for me.

Overall, I'm glad I have a home I can afford, and that I manage to take nice vacations, cover all the bills and save for retirement. I truly believe my housing situation will improve at some point, so I try to let it be for now. But certainly, having family that can help makes a huge difference.

[Deleted]

Around here young people can still buy fairly easily as there are quite a few starter homes in the 140-150K range.    Not quite like when I bought in 93 for 42K, but that one was quite a fixer upper.  

[Bonny]

Jun 8, 2019 16:56:35 GMT -5 phil5185 said:

Jun 8, 2019 16:19:49 GMT -5 Poptart said:

I think I'm still considered a millennial and I don't think I'll be able to afford to buy in my area. I was looking online and a one bedroom condo in my area cost $325,000, I live in a suburb of Los Angeles where a one bedroom apartment costs $1,800 in rent. In order to be able to buy I'd have to move 60 miles out from where I currently live and add a three hour commute to my life.

I noted in Post 1 that many millennials appear to be locked into HCOL areas - NY, Boston, PNW, Austin, CA.  My generation (WW2) we did the opposite - ie, relocated to regions for better jobs, better housing. What locks you to the LA region? 

But weren't you in the greater Pasadena area for a lot of your career? Housing back then had to cost more than the farm community where you were raised.

My father likes to tell the story about when he and my mom bought their first house in 1963 in a brand new northern suburb of San Diego. I think they paid around $20k and my father said he was ashamed to tell his mother how much they paid because they could have bought something similar on Long Island in NY for less. 

Fast forward to today that house would be worth close to $1M. Although expensive, San Diego has a thriving tech and biotech job, a result of both defense and University spin-offs. It's a bit of a catch 22, the high paying jobs tend to cluster in urban areas and those high paying jobs drive up house prices.

Whadda gonna do?

[alabamagal]

Jun 6, 2019 22:15:12 GMT -5 phil5185 said:

""moved from DC area to Phoenix               a very nice $600k house"""

Some of the millennial issues may be 'perspective' and 'expectations'.     We live in Phoenix - I've owned several houses ( rentals).  A $600k house in PHX is not just 'very nice', it is a mansion in an upscale area.   Most 2500 feet, 4 bdrm 3 ba homes with a pool are in $350k range.  And many houses are 1300 feet, 3 bdrm, for $200k.   For $600k you get a 2-story  4500 foot 5 bdrm 3 or 4 ba, 3-car garage.

But as a generality, millennials seem to be short on math skills.  They stress about paying too much interest - that's backwards.  Get the longest mortgage available - and a near-zero down payment if possible - and pay PMI if needed. The leverage is way more important than the absolute interest. Then invest the held-back cash on something that has a higher return than the mortgage. Plus, remember that the equity in the house grows way faster than value of the house (leverage).

House is 3200sf 4 be/4.5 ba no pool. It is on 1 acre in semi-rural area. Not quite a mansion, but very nice custom built home. They really wanted large lot and no HOA. My son is a math guy (actuary). He is not keen on PMI. And they really wanted a forever home, not keen on starter home then larger one later on. (Don’t like paying real estate commissions either).

[alabamagal]

Jun 7, 2019 11:08:47 GMT -5 Tiny said:

Jun 7, 2019 7:53:22 GMT -5 @athena53 said:

I REALLY hate that term. It's right up there with the marketers telling people something is a "must-have" or "you deserve...", usually to get them to overspend.

I try to be realistic about homes. Nothing is "forever". You change jobs, a condo complex goes up too close to you, the school system deteriorates, you downsize after the kids leave the nest. You buy what you can afford.

TBH I think "forever" as used today doesn't mean what we think it means. I think when "forever home" is used today - especially by someone under the age of 35 that they really mean for the next 5 to 10 years. I think younger folks have a skewed idea of time and that 5 to 10 years down the road REALLY does indeed seem like forever. I don't think it's just a millennial thing - I think it's human nature thing - so when we were that age we too had a hard time envisioning 15 or 20 or 50 years into the future... so 5 or 10 years into the future felt like a "forever". \

So, whenever someone says "this is my "forever home" or a "forever" whatever - I filter it to:    they really mean some length of time dramatically less than the rest of their lives.

I think my DS and DDIL idea of forever home is the home to raise their family in. Since they haven’t started a family yet, that would be 25 years or so. They didn’t want starter home then move 5 years later. Retirement home is pretty hard to imagine when you are 26.

[gs11rmb]

Jun 8, 2019 16:56:35 GMT -5 phil5185 said:

Jun 8, 2019 16:19:49 GMT -5 Poptart said:

I think I'm still considered a millennial and I don't think I'll be able to afford to buy in my area. I was looking online and a one bedroom condo in my area cost $325,000, I live in a suburb of Los Angeles where a one bedroom apartment costs $1,800 in rent. In order to be able to buy I'd have to move 60 miles out from where I currently live and add a three hour commute to my life.

I noted in Post 1 that many millennials appear to be locked into HCOL areas - NY, Boston, PNW, Austin, CA.  My generation (WW2) we did the opposite - ie, relocated to regions for better jobs, better housing. What locks you to the LA region? 

Bonny said something similar.  Often people who live in HCOL areas have careers that are not easily transferable.  I live in Atlanta, which is HCOL for the south but probably MCOL compared to other large cities.  My in-laws in small town Ohio would love us to move closer but there's no career opportunities for me.