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You talk about investing in the stock market and foreign assets.
Lets see a show of hands from people making $35,000 that are investing in foreign assets. Not many hands going up.
You are discussing investing from the point of view of a person that may have an extra $10,000-$15,000 a year or more to invest but we are discussing persons earning the median. There is not anywhere near that left over after all monthly bills.
You are also speculating on the rate of return and many other things. 401K's do not have a guaranteed rate of return and if hosuing does go down as you say then property taxes will also come down.
And where do you come up with a divorce rate of 50%. The divorce rate has declined steeply since 1981 and has dropped 33% to it's lowest level since 1970.
Zero down is in no way irresponsible for those that manage their finances correctly. If as you say, the stock market is so much better than housing wouldn't it make sense to invest that 20% in the stock market and pay the additional monthly payment on the house. You surely would be able to have a better return on it than the extra $200 you would have in housing costs.
And you also incorrectly assume that anyone that does not put 20% has no collateral.
"You can't count on your job being there tomorrow without a financial cushion"
Does this mean if you have a financial cushion you will never lose your job?
"Zero down is in no way irresponsible for those that manage their finances correctly." There's a contradiction in terms. How can someone without a down payment (aka someone who cannot manage their finances correctly BECAUSE they don't have two nickels to rub together for a down payment) be financially capable of home ownership? Some have even rolled the closing costs into the loan, which is even more absurd.
My assertion still stands. The money going into a home in a person's 20s is better suited in the stock market over a 30-40 year period versus a house. The odds favor the stock investor by far for better returns. Also, many young people tend to move a lot more than older folks, and homeownership presents an issue with liquidity for them. Converting to a rental is a hassle many young folks don't like to deal with either, and is only done as a last resort in a free falling selling market.
People don't invest in foreign assets because they are ignorant to the howto's of such a vehicle. That does not mean it wouldn't be better for them to do so.
It is unlikely property taxes will decline much. Government only gets bigger and increased foreclosures will likely put a strain on existing budgets. Your point would be true if municipalities completely cut off funding for what people deem "vital" for the community.
I am also saying that you can't count on your job being there tomorrow, SO one should have 3-6 months saved up ON TOP OF a suitable down payment for a house, even if it's just 5-10% (although 20% has been the norm when traditional standard were around).
I can understand that Realtors have a vested interested in maximizing sales. It's your bread and butter. However, don't expect myself to agree to what I believe are ridiculous ideas that someone without savings should "buy" a house (intentionally in quotes).
Someone even eluded to FHA possibly extending mortgage terms to 40 years. I truly believe that insanity is griping the market right now. It's a shame too, because the correction will be more severe with the introduction of ridiculous loan durations and other "creative" ways to finance people who likely aren't cut out to be homeowners.
Good point about divorce rates. Thanks for pointing it out to me. Nobody's perfect However, divorce rates in people's 20's are indeed high and most couples will not experience a rise in equity over the next few years (likely a more than marginal decline)
"Zero down is in no way irresponsible for those that manage their finances correctly." There's a contradiction in terms. How can someone without a down payment (aka someone who cannot manage their finances correctly BECAUSE they don't have two nickels to rub together for a down payment) be financially capable of home ownership? Some have even rolled the closing costs into the loan, which is even more absurd.
So - I guess all those Vets who have used their entitlement are stupid and incapable of managing their financies?? They are incapable of homeownership?
So - I guess all those Vets who have used their entitlement are stupid and incapable of managing their financies?? They are incapable of homeownership?
That's what VA is for. I am making a statement about the majority.
I'm primarily talking about white collar singles in their 20's who, when asked why they don't save, respond with "I want to enjoy this lifestyle while I can, while I'm young". We are breeding the next generation of serfs. Zero down for these future defaulters helps speed up their maturity when the bills come due.
We have them a dime a dozen in the Raleigh/RTP area. Eat out on Glenwood South 3-4 nights/week and don't have a dime to their name. Great jobs at almost six figures and require a zero down mortgage. When the recession of '08 hits that'll make 2002 look like a cakewalk, what will happen to these folks?
That's what VA is for. I am making a statement about the majority.
I'm primarily talking about white collar singles in their 20's who, when asked why they don't save, respond with "I want to enjoy this lifestyle while I can, while I'm young". We are breeding the next generation of serfs. Zero down for these future defaulters helps speed up their maturity when the bills come due.
We have them a dime a dozen in the Raleigh/RTP area. Eat out on Glenwood South 3-4 nights/week and don't have a dime to their name. Great jobs at almost six figures and require a zero down mortgage.
Yep - we have them here too.
And, when I was their age - I did the same exact thing. I still bought a home - sold it, bought another and so on. And here 40 years later, I have never defaulted on one of them - raised a family too -
And, when I was their age - I did the same exact thing. I still bought a home - sold it, bought another and so on. And here 40 years later, I have never defaulted on one of them - raised a family too -
Go figure.
Yeah, with revolving debt and interest rates of 30%+ to their eyeballs, I'm sure the youth will experience a similar path to financial freedom you enjoyed, especially when the securitization of CC debt is called in by foreign investors.
There is no way you did what these people did unless you were a lawyer or doctor. Even if you somehow managed to do so, it is so outside of the norm it's almost laughable.
Not defaulting on a house is nothing to be proud of. It's pretty much expected by anyone who's not totally irresponsible. It's like saying that you take care of your kids.
There is no way you did what these people did unless you were a lawyer or doctor. Even if you somehow managed to do so, it is so outside of the norm it's almost laughable.
Nope - was not a doctor or lawyer. A working stiff. Worked hard.
We did not have health insurance back then - of course, we really didn't need it either -
And, I did "manage" to do so - and, for my generation, it was not outside the norm
Yes, but health care costs, food costs, and travel costs have skyrocketed. Our parents and grandparents paid peanuts for the necessities of living relative to their income compared to what's paid now. Debt levels are the highest they've ever been ($900 Billion in CC debt), and savings are negative.
Dont' really want to get into government economic conspiracy theories. To be honest, I don't have numbers for health care, food and travel compared to 1967. But you have to place blame of $900 billion in CC debt and negative savings on individual consumers. Consumers took on that debt. What portion of that $900 billion debt on CCs do you think is tied to health care premiums, food costs and energy? Probably very little. It's more likely the annual family ski trip to Aspen, the high-end toys (adult and child), eating out four times a week. It's mostly conspicuous consumption and not necesseties. If anything, I'd say health care costs for someone without adequate insurance (which is probably almost all of us) might rank highest among those you mention as contributing to CC debt.
But the bottom line is you can't lease a $50,000 car (or two), have $10,000 in credit card debt (if not much more) and buy a 2,400 sf house on a median income. That's not a median life style, although many think it is.
I'll stick with the theory that too many want too much and won't accept anything less.
Dont' really want to get into government economic conspiracy theories. To be honest, I don't have numbers for health care, food and travel compared to 1967. But you have to place blame of $900 billion in CC debt and negative savings on individual consumers. Consumers took on that debt. What portion of that $900 billion debt on CCs do you think is tied to health care premiums, food costs and energy? Probably very little. It's more likely the annual family ski trip to Aspen, the high-end toys (adult and child), eating out four times a week. It's mostly conspicuous consumption and not necesseties. If anything, I'd say health care costs for someone without adequate insurance (which is probably almost all of us) might rank highest among those you mention as contributing to CC debt.
But the bottom line is you can't lease a $50,000 car (or two), have $10,000 in credit card debt (if not much more) and buy a 2,400 sf house on a median income. That's not a median life style, although many think it is.
I'll stick with the theory that too many want too much and won't accept anything less.
My point exactly as to why homeownership is suited for so few people
Too many people still want their toys AND their house.
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However, divorce rates in people's 20's are indeed high and most couples will not experience a rise in equity over the next few years (likely a more than marginal decline)
