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One alternative is to buy a small, "functionally obsolete" older home with formica counter tops.
Just looked up my first home - built in 1992, 1300 square feet, in a safe, pleasant suburb of a mid size town that enjoys low unemployment and a good economy. List price - $137k. And hey, it's got a "master suite" and TWO bathrooms - and an open floor plan! It may still have formica counter tops though...probably won't work for many people because of that.
Thank You! You bring up an excellent point.
My home is 1100 square feet and was not in great shape when I purchased in early 2011. Too many people want "move in ready" with the whole nine-granite counters, master bath, etc. but the cost to renovate will always be factored into the sale price-and then some, so people can save money buying a house in poorer condition and doing the work themselves-that way it can be more personalized and tailored to their needs anyway. I understand why people want "move in ready" and for a lot of people it makes sense, but people should keep their options open. I did not want a huge mortgage "on my back".
That brings up another issue though-it can be difficult to qualify for mortgages less than a certain amount-for some banks they will not do anything less than $100k, so investors that pay cash are in a more favorable position to scoop up the cheaper homes that may need work.
No, the anomaly was groundwork for and the events of the mid-2000s, the situation before and now is, and should be, normal.
Before that stupidity, the American Dream used to be owning your own business, having the opportunity to excel in accordance with your abilities, and keeping the fruits of your labor. Even the robber barons of the gilded age did not build their dream homes until the final stages of their lives, like so many tombs, and not before.
What is disturbing about the "new America" is the new, low rate of new business formation.
No, the anomaly was groundwork for and the events of the mid-2000s, the situation before and now is, and should be, normal.
Before that stupidity, the American Dream used to be owning your own business, having the opportunity to excel in accordance with your abilities, and keeping the fruits of your labor. Even the robber barons of the gilded age did not build their dream homes until the final stages of their lives, like so many tombs, and not before.
What is disturbing about the "new America" is the new, low rate of new business formation.
But OH THE HORRORS of that first kitchen. Basically third world standards!!! How on earth could anyone be expected to actually live in that space? (Of course I'm kidding.)
People lived in that modest 992 square foot house and raised families for 60 years using that kitchen before I bought the place. My next door neighbor has owned her house since the early 1960's so I have the history of who has owned my house. It was always the shack of what is otherwise a middle class and upper middle class neighborhood. I converted it to single professional/DINK/empty nester housing that would now be unaffordable. I know lots of people who buy disasters in otherwise good neighborhoods, put in a ton of sweat equity, and end up with a very nice home that would be otherwise unaffordable.
The bathroom remodel was similar. I lived with the original reality TV reject bathroom for a couple of years. I'm none the worse for it. The toilet worked. The shower worked. I could brush my teeth and shave at the bathroom sink.
I don't recommend my particular brand of financial suicide where you completely reconstruct a small house from the inside-out but we're both making the same point that lots of millennials can afford a small fixer-upper and put some sweat equity into it but they come from a pampered upbringing where they're expecting their parent's house in move-in condition. It doesn't work that way and it's never worked that way unless you're a married 5%er couple.
Up here in the far frozen North, when banks foreclose on a home, they often let the residents stay there as long as they keep the place heated and pay the taxes. The bank owns the home, but the neighbors don't know that. The bank has the property down as a "performing asset". Psst, it s not a performing asset. The resident who gave the bank a 30 year mortgage has already paid double what he paid for the home in cash flow.
Often times the resident is still paying 6 3/4% on his debt because he doesn't know any better. Can you say housing collapse? A town in Maine recently sold 16 homes for $48,000. That is not each. That is for all sixteen homes or $3,000 per home.
There are pockets of prosperity in our country, but there are far more absolute sink holes of sudden poverty that far outnumber those pockets of prosperity. We have 95,000.000 adults between age 18 and 65 not working in our country. They are not contributing much to our economy. For those suffering from innumeracy, that is nearly three times the entire population of Canada, NOT WORKING!
Apologists will point out that some are stay at home moms, home schooling their kids. There are also third generation welfare people. The people who vote for a living outnumber those who work for a living. To call up the famous John Belushi quote, "Game over, Man!"
Tick, tick, tick.
It is 2016. Do you know where your IRA is tonight?
So, you're claiming that half of all adults are out of work? Uh-huh. Another scare tactic from the sky-is-falling crowd:
People in the US in 2010: 308.7 million.
People under 18 in the US as of 2007: 73.7 million.
People 65 and older in the US as of 2010: 40.3 million.
People between 18 and 65 in 2010: 194.7 million.
Full time college students: 13 million. Part time college students: 7 million.
Stay at home moms: 10.4 million.
Disabled people who are not working: 14.1 million.
Early retirees under age 65: easily 20 million, maybe more. There's probably 35-40 million people in this group. About half of people turning 62 start collecting SS at that age. Millions more who have defined benefit pensions retire between 55 and 65.
BTW, much of Maine has always been an economic backwater, even back in the 19th century, for the same reasons it is today: isolated and few resources.
Buying a home doesn't necessarily increase wealth. ...
Ha! Mine seems to diminish wealth.
I love my home. I had to do quite a lot to obtain one. But I didn't buy it thinking it was going to provide wealth. If I pay my mortgage on schedule, the interest paid will roughly match equity growth over time. I ran some numbers with a financial adviser before buying. When pitting rent/ins against mortgage/tax/ins for 30 years, the difference to my retirement assets was $25K better by owning.
I decided to own because I have always wanted to own a home, and because I want to paint the walls whatever darn color I choose. Some days I wonder what I was smoking...
My home is 1100 square feet and was not in great shape when I purchased in early 2011. Too many people want "move in ready" with the whole nine-granite counters, master bath, etc. but the cost to renovate will always be factored into the sale price-and then some, so people can save money buying a house in poorer condition and doing the work themselves-that way it can be more personalized and tailored to their needs anyway. I understand why people want "move in ready" and for a lot of people it makes sense, but people should keep their options open. I did not want a huge mortgage "on my back".
That brings up another issue though-it can be difficult to qualify for mortgages less than a certain amount-for some banks they will not do anything less than $100k, so investors that pay cash are in a more favorable position to scoop up the cheaper homes that may need work.
BINGO!!!!
There's a 900 Sq foot home on a 1/2 acre right down the road from me I WANT. Asking price is 44,900. Place is outdated by at least 20 years with an tax assessment from 2014 for 30,589.....
Sigh, I can't even GET a bank to make a preapproval for it as I wanted to offer 31,000. Ugh. Credit isn't god enough for a personal line of credit for that much nor is income high enough since that would have to be paid off in 7 years....... if I could get a home loan the total including taxes and insurance would be LESS THAN MY PRESENT RENT.
I have no problem fixing it all up and just living wit it until it's updated as I have the cash....
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