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Old 07-03-2020, 09:26 AM
 
Location: Camberville
13,067 posts, read 17,928,053 times
Reputation: 22264

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I definitely feel this way.


I'm 32, make 80K a year, and have 50K for a downpayment + a 9 month emergency fund, but that will get me at best a 2 bed/1 bath condo deep in the suburbs. I might have been more OK with that when my job was more secure, but that feels much more fleeting right now. Condo fees are also exceptionally high. My region is not expected to have much of a decrease in housing costs, especially at the entry level, because inventory is so low as it is.



My hope is that I can hang onto my job through the next year and maybe my area will dip by next summer - but I'm not too hopeful. I'm also focusing on upping retirement savings since my employer match has been suspended for the fiscal year and also up my emergency savings since my field is getting hammered by the pandemic, so that means I can't really expect to increase my downpayment amount by all that much.



It's certainly frustrating. I spent most of my 20s fighting my way out of cancer and, subsequently, cancer debt but still managed to grow my career and get a master's degree debt free. I'm starting an MBA, also debt free, this fall. I hope it helps to increase my salary. I had thought by now that I would be a homeowner and it really grinds my gears that I'm not.
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Old 07-03-2020, 10:17 AM
 
329 posts, read 176,910 times
Reputation: 376
Its crazy and depressing that even with a worse economy than 2008-2012, home prices are outrageously high and not even budging and even increasing with bidding wars and homes going over asking price even with Covid-19

What has the world come to? Its no wonder people struggle to make it today.

They need to raise mortgage rates big time. And bring home prices down. Stop making responsible people debt slaves and giving them no choice. With high interest rates and lower home prices you have a choice as monthly payment is the same, but at least the balance is much lower and possibility of paying off much sooner and/or saving to pay cash is much more doable by living minimalist with your parents or in a tent, or SUV (For tent and SUV< shower at YMCA or gym with cheap membership) or cracker box apartment with the cheapest possible rent.

Only people hurt by not high home prices and stupid levels fo appreciation that are high are those who own investment properties hoping to sell them later, those who borrow against equity in their own home. And those people are scumbags I have 0 sympathy for and are not what owning a home is about. Having more equity in home should be all about being closer to being mortgage free, not feeling richer or being able to borrow against.

Well maybe home builders are hurt by lower prices too and they I can sympathize with unlike above, but land prices would be much lower with much higher mortgage rates so they would get a head start on that to offset building costs. And the government should give huge tax credits to builders to build starter 1000 to 1400 square foot homes at much lower prices.

Its a sick world we live in when a realtor 8 years ago asked me if he thought I was the only one who thought they could get 3 bedrooms and 1 bath for $100K in Metro Detroit when he stated prices would go up significantly in June 2012 in 1 year when I became worried about it as I planned to buy in 1 year. Oh yeah like $100K is such a bargain for a small house dorks. $50K would be a bargain. But how in the world is $100Ks for a small bungalow a bargain. $100Ks is a hell of a lot of money for that size of a house and is in fact 10% of $1 million dollars which is a lot of money. Just made my blood boil at the time as society wanted to brainwash into thinking $100Ks is a bargain for a small little house when in reality it should not be. Stupidly expensive well over $200Ks they are now which is sad.

And brainwash us into thinking $200Ks is a bargain for a 2000 square foot home instead of the stupid expensive $400K they are now.

It worked out as I got my home paid for in cash in March 2013, but I had to sweat it out terrifyingly because of the scumbag Bernanke trying to reinflate housing bubble as process of it happening was underway 6+ months running at the time.

Glass-Stegal act needs to come back to get things under control again.

Its no wonder today's younger generation struggles to make it, even those who work hard and are conservative.
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Old 07-03-2020, 10:33 AM
 
Location: Sacramento CA
1,076 posts, read 222,490 times
Reputation: 2215
It is all about liquidity Interest rates are historically low. 0% prime interest rates mean sub-4% mortgage rates on 30-year fixed loans. Everybody qualifies these days and 4% lets you buy more home than 9%.

Like during the housing bubble, the government wants people buying homes to help the economy recover. It is a bit of a shell game but they are pushing home sales to help the economy.

Hopefully this time it is real money and not funny money.

At the same time, home prices feel bubbly right now. I wouldn't buy unless I really had to own a home right now for some reason. I feel we are at a cycle high and I think prices will be coming down at some point, but when? Nobody ever knows the top or bottom. You can kill yourself waiting?

I would only say, for those who can't afford a home or can't bring themselves to pay these prices, I believe prices will eventually come down to something more reasonable. Not in San Francisco or Hawaii or Manhattan, but in most places.

Of course, I could be completely wrong.
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Old 07-03-2020, 10:51 AM
 
329 posts, read 176,910 times
Reputation: 376
Quote:
Originally Posted by Igor Blevin View Post
It is all about liquidity Interest rates are historically low. 0% prime interest rates mean sub-4% mortgage rates on 30-year fixed loans. Everybody qualifies these days and 4% lets you buy more home than 9%.

Like during the housing bubble, the government wants people buying homes to help the economy recover. It is a bit of a shell game but they are pushing home sales to help the economy.

Hopefully this time it is real money and not funny money.

At the same time, home prices feel bubbly right now. I wouldn't buy unless I really had to own a home right now for some reason. I feel we are at a cycle high and I think prices will be coming down at some point, but when? Nobody ever knows the top or bottom. You can kill yourself waiting?

I would only say, for those who can't afford a home or can't bring themselves to pay these prices, I believe prices will eventually come down to something more reasonable. Not in San Francisco or Hawaii or Manhattan, but in most places.

Of course, I could be completely wrong.
Well everyone qualifying these days. Sounds like the same thing prior to 2008 and thats a problem. Not everyone should qualify.

And relaly no one without aty least 20% down minimum should qualify to buy any big ticket item be it even a boat or a car or RV let alone real estate/land/house. Or else it is really funny money as it increases debt levels way too high which is unsustainable.

Oh yeah the government wants home sales up to help economy recover. LMAO. Based on the ponzi scheme of ever increasing debt levels all the time with outrageously high home prices.

There would be plenty of home sales if interest rates were high and 20% minimum down payment was required. People would have to actually save money and prices would be better. Thus still enough home sales even though not as many. Who cares though? The economy is a lot more than housing and stupid price appreciation which the later should not be much of a thing.
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Old 07-03-2020, 11:02 AM
 
Location: Sacramento CA
1,076 posts, read 222,490 times
Reputation: 2215
Liquidity causes bubbles. No doubt about it.

The Federal Government keeps blowing bigger and bigger bubbles, flooding us with liquidity (loose money) and it doesn't end well. It ends someday in financial collapse, which I keep praying comes after I am gone. Meanwhile, having some gold or silver is the best hedge against financial collapse.

All that is way beyond the scope of your post, which is a sound and mature post for keeping an economy truly healthy over the long term, but the privateers, financiers and robber barrons are not interested in that. It is all about the quarterly profits and returns. These idiots only think 3-months ahead, and it is killing us long term. These CEOs dont care if the world goes bankrupt the day they die, and they know their kids will inherit their multi-million dollar savings and investments. They don't care.
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Old 07-03-2020, 11:05 AM
 
56 posts, read 157,595 times
Reputation: 125
I think people focus on what they want, rather than what they can afford. Most people buy a smaller place than they'd really like with fewer bells and whistles and trade up later by selling. A lot of people today want their first place to have everything they desire right out of the gate. You can sit on the sidelines and rent and wonder when you'll ever afford something, or you can adjust your expectations, buy something that might not be your ideal place, (longer commute, one bedroom, not fancy, etc.) do a little improving here and there and sell in a few years.

Saying "all I can afford is a..." means you can afford something. So you either take that for now and get in the game or wait for something that may never happen. I live in NYC where everything is priced crazy. You'd think. But there are small, one bedroom co-op apartments that can be had for $200k if you look hard enough. Plenty of my friends and colleagues bought small, studio or one bedroom co-ops for even less than $200k, stayed there for a couple of years and made a big profit when they sold to a buyer that was in the same position as the seller was a few years before. The extra cash allowed them to trade up.

The person who wrote out the mortgage payment scenarios for the OP was spot on. I'm not seeing any impediments to the OP buying something.
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Old 07-03-2020, 11:32 AM
 
Location: Everywhere and no where
914 posts, read 915,903 times
Reputation: 1544
Quote:
Originally Posted by Johnhw2 View Post
OP when evaluating your first home purchase financially do not make the mistake I did. I bought my first home ni 1973. Wife and I both had good paying jobs in Houston Texas when Houston was unknown and low cost. We bought a home where the payment would be similar to the rent we were paying. So we bought a nice older but close in small first home. The realtor wanted to show us homes costing 25% more but I insisted on the lower price so we bought a small first home.

I did my own taxes at that point and the first year of taxes after buying opened my eyes to the value of the interest and property tax deductions. Turns out I could have bought the home the realtor pushed us to consider if I had taken tax savings in account on that first home purchase. Those were times when home prices were soaring in Houston so we left a lot of equity on the table but buying that $28k home not $35k home a larger home in a nicer area. Be sure you know how interest and proeprty taxes impact your federal income taxes and state if you live in a state income tax location
Really good point. I helped a friend do taxes recently. My friend moved into a home he bought that was priced about the same as his former rental. After taxes, due to the mortgage and property tax deduction, he was saving $5k additional due to the deductions. He was amazed that anyone would continue to rent given that he could buy a far nicer home / bigger space with yard and garage space, for the same price as the rent he was paying, and still save $5k per year in deductions.

I also told him that if he were to sell down the road, the capital gains would be excluded to a significant amount as well. It beats renting hands down money wise in his city.

I have another friend who refuses to buy, no matter what I tell him. He keeps dumping money down the rent, even after I show him all of the calculations and numbers. You can't cure stupidity.
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Old 07-03-2020, 11:36 AM
 
Location: Sacramento CA
1,076 posts, read 222,490 times
Reputation: 2215
AndroidAZ,

A year before retirement, I was forced to transfer to Sacramento. I sold my small home and rented. My rent is now $250 more than my old home mortgage, which only had 3 years left on a 15-year mortgage, so my interest was laughably small while I was primarily putting principal into my home.

You really win the game by buying and keeping a home long enough to lock into old payments while inflation pushes up the cost of everything else around you, especially rents.

Good advice.

I am looking forward to buying not long after I finally find a city where I want to retire.
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Old 07-03-2020, 02:40 PM
 
1,842 posts, read 540,407 times
Reputation: 1137
[quote=RJA29;58527272]One thing that was mentioned earlier, but has not been discussed more in this thread -- family wealth. LOTS of people get help from their families, and, suddenly, the $400K house is really a $200K house. You can see how this distorts things for those that don't have help.[/QUOTE


We have been lucky enough to help both our kids with down payments for their first homes. In the range of about 10% if they would match with their own savings to avoid PMI. Their banks required that we sign an agreement that it was a gift not a loan. The kids were very grateful that it was much more generous than any of their peers got from their families. I can’t imagine anyone being able to give their kids $200K or half a home cost.
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Old 07-03-2020, 02:57 PM
 
3,050 posts, read 1,335,413 times
Reputation: 3760
Quote:
Originally Posted by Johnhw2 View Post
OP when evaluating your first home purchase financially do not make the mistake I did. I bought my first home ni 1973. Wife and I both had good paying jobs in Houston Texas when Houston was unknown and low cost. We bought a home where the payment would be similar to the rent we were paying. So we bought a nice older but close in small first home. The realtor wanted to show us homes costing 25% more but I insisted on the lower price so we bought a small first home.

I did my own taxes at that point and the first year of taxes after buying opened my eyes to the value of the interest and property tax deductions. Turns out I could have bought the home the realtor pushed us to consider if I had taken tax savings in account on that first home purchase. Those were times when home prices were soaring in Houston so we left a lot of equity on the table but buying that $28k home not $35k home a larger home in a nicer area. Be sure you know how interest and proeprty taxes impact your federal income taxes and state if you live in a state income tax location
Amazing how ignorant people are on something as basic as taxes. No you don't save additional money by taking out a larger mortgage. Thats like saying you saved an extra 5k on deductions at the casino by losing 300k instead of 200k. So losing that extra 100k was a good thing. NO. Deductions are based on losses on the additional interest you have to pay. SO if you "save" 5k, you lost an additional 40k in interest payments. Therefore you didn't save anything. You lost more to interest.
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