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like it's always been.....save first. (well, except for the past 5 yrs)
what's the deal with people thinking young 20 somethings are entitled to a home?
to answer your question - save up enough for a downpayment - $40K and have a savings cushion, and you can probably afford something around $200K.
We bought a house in our 20s. The house I bought was $33,000 , brand new,1976, on a 3/4 acre lot on Eastern LI. Sale price now is $400,000 with the slump. Taxes $9000 a yr, and its only an 1800 sq ft ranch. Then we put down 10%, at 8.5% mortgage. The builder was also give 5% down, but with private mortgage insurance. I sold it 6 years latter at more than double the price, I paid. My friend bought in Momouth Heights in Manalapan then and paid about the same. Her taxes then were less than mine. That is when NJ was cheap.
Twenty Somethings can afford a simular house where my son lives in Murfreesboro. there are houses near his apt selling at $110,000-$120,000, Taxes $950 a year.
It just depends where you live, what's affordable.
I just find it hard to relate to these "good old days" posts when in my family my parents (2 blue collar, mom ALWAYS worked) didn't buy their first house until they were in their 40's. So to me, homeownership was never a right for all income levels back "in the day".
and a word of caution, don't mention entry level school teachers on this board - the majority think they are vastly overpaid as it is and should work for a pauper's salary, and be happy about it.
My parents were in their late 20s when they bought a house in Lawrence, LI. It was a summer community and they paid, yes, $3,000 for the house. It was Waterfront, and is the house my mother owned until she died. My father passed away before her in his 50S. My mother borrowed from an Uncle to buy it and paid him back in 3 years. This was in the 50s. She was a stay at home Mom but was careful with money. The house was a smart investment. They were married 5 years, but I bought my first home when we were married only a year.
That is a huge Mortgage for 60k. I would never advise anyone to take that at that income. I used to work at a Bank on wall street doing mortgages.
Diane G
What do you recommend in terms of loan to income ratio ?
I've seen some sources suggest that spending 1/3 of ones before tax dollars on a mortgage is affordable, but this seems ruinous given NJ property taxes.
I suggest that those enjoying and cheering the price decline are those who would like to live in the better neighborhoods but are stuck in the jobs that do not pay what they need to buy. Sort of like the guy who has always owned Chevy's but now he is shopping in the Caddy showroom trying to buy a Caddy for the price of a Chevy. Ain't gonna happen just like him moving up to a better neighborhood, ain't gonna happen.
For those who want to buy now good for you and lucky for you those naysayers won't be moving to your neighborhood anytime soon.
P
Um, no. It's more like the investment banker who is told that he can't have the BMW, or even the Camry -- he's going to have to settle for the Yaris.
Median incomes in NJ are 80k, median home prices are above 400 in most middle class neighborhoods. Many of the people who can't afford a typical suburban home in NJ today are making well over the median income for most NJ neighborhoods.
In a rental situation the landlord (homeowner) is the one paying the mortgage, mortgage insurance, etc., plus typically making a profit, through collecting rent that his/her renters pay to him while building equity in the property. So either way, the renter is still paying all the above, just not for himself.
The renter does not pay the transaction costs every time they move. To the extent that the landlord's costs are forwarded to the tenant, they are amortized over the landlord's period of ownership, not the tenant's period of occupancy. See "buy vs rent" calculators for how the numbers turn out.
I pay less than $1500/month rent. There is no way I would contemplate buying a condo where the monthly mortgage payment was the same as my current rental, because while it might be good enough short term, it will be woefully adequate over the sort of time horizon in which it makes sense to buy.
We bought a house in our 20s. The house I bought was $33,000 , brand new,1976, on a 3/4 acre lot on Eastern LI. Sale price now is $400,000 with the slump. Taxes $9000 a yr, and its only an 1800 sq ft ranch. Then we put down 10%, at 8.5% mortgage. The builder was also give 5% down, but with private mortgage insurance. I sold it 6 years latter at more than double the price, I paid. My friend bought in Momouth Heights in Manalapan then and paid about the same. Her taxes then were less than mine. That is when NJ was cheap.
Twenty Somethings can afford a simular house where my son lives in Murfreesboro. there are houses near his apt selling at $110,000-$120,000, Taxes $950 a year.
It just depends where you live, what's affordable.
Diane G
I'm not sure the point of your post, but I'll tell you this...NJ was NEVER cheap.
The example I used was a joint income of $60,000.00. Not out of reach for two fairly sharp individuals. Yet many here say it is woefully short of what is needed to own a decent, not extravagant home in NJ.
I've been upfront I don't live in Jersey anymore, and haven't in a long time. And I'm not claiming homeownership is a "right". But totally apart from the current crisis, I still think it is desireable. I gotta say, this whole affordablity issue seems more out of whack then I can ever remember.
From what I've garnered here, it's the tax issue even more than home price that is the main obstacle. Did I get that right?
My parents were in their late 20s when they bought a house in Lawrence, LI. It was a summer community and they paid, yes, $3,000 for the house. It was Waterfront, and is the house my mother owned until she died. My father passed away before her in his 50S. My mother borrowed from an Uncle to buy it and paid him back in 3 years. This was in the 50s. She was a stay at home Mom but was careful with money. The house was a smart investment. They were married 5 years, but I bought my first home when we were married only a year.
Diane G
again, not sure the point of your post. i grew up in a very blue collar neighborhood where a lot of people rented, or lived with family in 2 family homes. your experience doesn't mirror mine. i come from an area where a lot of moms worked.
The example I used was a joint income of $60,000.00. Not out of reach for two fairly sharp individuals. Yet many here say it is woefully short of what is needed to own a decent, not extravagant home in NJ.
I've been upfront I don't live in Jersey anymore, and haven't in a long time. And I'm not claiming homeownership is a "right". But totally apart from the current crisis, I still think it is desireable. I gotta say, this whole affordablity issue seems more out of whack then I can ever remember.
From what I've garnered here, it's the tax issue even more than home price that is the main obstacle. Did I get that right?
$60K is very easily reached with 2 workers in NJ - 2 first year teachers alone will make low $70's.
the issue may be taxes depending on where you live, but the bigger issue is downpayment, which will bite you wherever you go (and even moreso now).
homeownership is desirable for most, but it's something to strive for, not to be expected when you move your tassle from one side to the other.
Does anyone here know what type of credit profile is actually being appproved for a mortgage these days? Assume the debt to income ratio is sensible, are the banks just approving "top tier" applicants, or are they still approving folks with dings on their credit history?
Gosh, if nothing else I hold they have tightened standards.
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