Buying a House

[madelise]

When did you buy your first house? And how old were you? For those of you who have adult children, are you seeing a trend in a delay or nonexistance in home ownership?

Very few of my same-aged peers are home buying. I feel like I've been raised to buy a home instead of rent, but as I save every month, the cost of homes increase every month. It feels like I'm chasing a moving target.

My financial advisor 2 years ago told me to save as if I need $X as a down payment for "in 5 years". Now I'm told to save $2X as a down payment for "in 3 years".

Ya. Moving target. It's disheartening.

 

[Matata]

I bought my first house at age 42, two years after a divorce. I was eligible for a 1st time home buyer's program and it cost me $2500 to get into a newly built house. At the time I wasn't making much money and the mortgage was a bit less than half of my monthly net. The same conditions applied back then to your situation. Housing costs were rising rapidly and a lot of people who could afford a mortgage couldn't get a down payment together. I bought when it as a buyer's market and sold the house 2 years later for more than double what I paid. Bought my current home when it was a seller's market and paid way too much for it but it was our holy grail house.

My eldest stepson who makes nice $ working for Google bought his first home 6 months ago in Portland Oregon and was transferred to Mt. View CA so he got to live in it only for a few months. He's currently renting it and hoping for a transfer back to Portland. All of his friends who aren't already homeowners are planning on buying soon and they're all in tech jobs that pay nice salaries. My other stepson works 3 jobs in the music industry in New York City and has no plans to buy there. All of his friends also work multiple jobs to afford to rent a shoebox in NYC and none have plans to buy there.

 

[madelise]

lol Matata, I live in Mtn View right now.

Oy.

It feels so impossible.

 

[artdecogirl]

We bought our first house when I was 23 and DH was 24, our children are all in their 30's and none are home owners, we have encouraged them to buy but they are not very interested, they do not want to be "tied" down.

 

[LLJsmom]

First house 28. Second 33. Yes, very hard Madelise, esp in the Bay Area. I too was brought up to buy property. Can you get j to a condo to build some equity?

 

[Snowdrop13]

I bought a flat when I was 28, then our current home when I was 32. At that point we had just got married and so had equity from both our flats to use. That definitely made it easier! We also moved from city centres to the outskirts so prices were not so high.

I'm saving hard to help my kids own property when they are grown up!

 

[acebruin]

I refuse to move to the Bay Area just because of the meteoric home prices. I know I'll get paid more there, but then I'll have to pay more for living expenses especially housing. So really it's not worth it for me. I bought my first house when I was 30.

My biggest regret is not buying a house / apartment when I was still in college here in CA.

 

[missy]

Hi Madelise. When I bought my first home I was single and I actually broke a record in my building (they made a big deal about it too lol) as I was the youngest person to ever buy there which now of course seems crazy but at that time it was not the norm. I was 28.

I had moved to the neighborhood after I completed my residency and I was 25 and rented in the neighborhood for 3 years and knew it was where I wanted to live. A great area, great people, lots of dogs a beautiful big park, museum, library and right near the subway. It was perfect for me. I knew it was time to buy and my parents always told me buying was better than renting (it was the 90s so it was even more true then).

I found my dream apartment pretty quickly and the building had a 25% down payment which was pricey for me as I was still earning peanuts. But I had saved as much as I could knowing I wanted to buy a home and so I had the down payment and I was able to swing it. And (against financial advice from my advisors and others) I paid off my 30 year mortgage within 3 years. I didn't care if it went against conventional wisdom because for me it was the right move no doubt. I didn't want any debt and for me mortgage is debt. Even though it is "good" debt. I just skimped and saved and paid it off.

However now of course it is much more challenging I think for young people to buy a home especially in expensive real estate cities like NYC and LA etc.

And just wanted to add buying was the easiest way to being able to move up and buy a bigger home if that is your goal. I bought my 2 bedroom and 2 bathroom in the 90s and then less than a decade later I sold it for 4 times what I paid for it allowing us to upgrade to our current 4 bedroom 4 bathroom apartment right in the same building. Where else can you make that return on your "investment"? I never bought my first home (or any subsequent home) as an investment per se because I needed a place to live and that is how I evaluated it but that is what it is nevertheless.

Good luck Madelise and I hope you can find the right home at the right price. I don't know what the prevailing wisdom is but my gut always tells me it is better to own than rent. I don't want to be at the mercy of someone else who might suddenly decide they want me to move because they need the home. And I want to make the home my own and do what I want with it and not live with someone else's vision. One thing to keep in mind no home will be perfect. We watch all the HGTV house shows and it seems so many couples/singles want everything to be just perfect in their first homes. There is no such thing. Even if your budget is 10 million believe me the perfect home just doesn't exist without you taking it and making it your own. There is always something you want to change so one piece of advice is keep expectations realistic especially within your budget.

Best of luck and I hope you can find your dream home!!!!

 

[Ally T]

I bought my first house when I was 32 & had met my then boyfriend now husband. I had always rented before that as I lived between the UK & NZ. He had recently sold a house that he had owned for 9 years from which he had sold for twice what he paid, so that equity made a massive difference to our purchase. We have since overpaid & overpaid on our mortgage, so what was a 25 year loan will be completed in theory after only 15 years (another 4 to run), but inheritance from his fathers estate is due at the end of this year, so it will be paid off by then. This makes us both feel a sigh of relief, as then it will be ours & we can look to put that extra money away for a bigger, forever home & our daughters future security.

In the U.K. it is certainly a generational thing. My parents priority was to own their home outright, as is the priority for me at the age of 42. Younger than me seem happy to rent, and are a bit more footloose & fancy free.

 

[missy]

Alex that is exactly my thinking. It was and still is a priority for me (and my dh once I met him and we got married) to be a home owner. It was security and peace of mind for me. It was my (and then our) home. Our safe haven. No one could take it away. I could live there as long as I wanted to and make it my own.

And as you (and I) wrote above the equity from my first home once sold allowed us to buy our second city apartment. And without that security we wouldn't have been able to purchase our second home-our house at the beach. So buying that first home set up a situation that allowed us to to this. It was the second single most important decision I ever made.

 

[Ally T]

I agree! I love my home so very much, but I know it's not our forever home. Our village is extremely rural (technically it's a Hamlet as it's has no church) surrounded by farms & woodland. There are some beautiful properties scattered around here that are considerably larger, old farm houses, dairy farm buildings & converted barns. We want to stay here as it's so comfy. We had several valuations 3 years ago that came in higher than we paid, which justified an Orangery to be built onto the back & know we were still safely quids in. Once the mortgage has gone, the rest of the inheritance will be banked & saved along with what are usual monthly repayment was. We will save that money as we won't miss it. And hopefully 3 or 4 years from now, when opportunity arises, we will be in a position to pounce on a larger more characterful property near here without having to take any mortgage. Timescale wise, I am a little behind you, but I definitely have the same grand plan!

 

[Asscherhalo_lover]

I'm not buying a home until all of "our" student loan debt is paid off. That's our current mortgage. Our rent is less than half of what a mortgage would cost so I don't feel that we're wasting much money. Our rent is basically what we would pay simply in property tax and utilities. It works for now since we only have one child but we do not want to have any more children until we buy. I'm 31 and we estimate within 5 years we'll be ready.

 

[t-c]

1st house in the SF BayArea peninsula at the age of 29. I remember thinking real estate was crazy back then, but I was advised to buy as it wasn't likely to get better -- which was true.
2nd apartment was in NYC, I think the only market crazier than SF. But we got a deal during the recession; we met the strict loan requirements.

 

[Austina]

I was 19 when we bought our first home, 21when we bought our second larger home, 25 when we bought our 3rd larger home, 33 when we bought our 4th larger home, 40 when we bought our 5th and biggest home. Stayed there for 12 years, 52 when we downsized a bit to this house. We also bought our son a flat in London when he was 20, which he sold last year, and 2 years ago, we gave him the money to buy a lovely house in Austin. We'd rather he had the money now when it'll make more difference to him, than the Govt. grabbing even more of our hard earned money in inheritance tax

 

[YadaYadaYada]

Bought my condo when I was 22, lived there for three years then bought a house at 25 which we still live in now, 13 years later.

I would rather a condo than a house, it is a lot to take care of.

 

[liaerfbv]

We bought our first (and only) house when I was 28-29. I hated everything about home ownership. We lived there for almost 2 years and sold it and moved out of state. We'll rent forever going forward most likely.

 

[telephone89]

I bought my first at 24. My mortgage was lower than a lot of my friends rent, so it was worth it. I have a few investment properties now, and I really attribute it to buying so young.

 

[arkieb1]

Either 26 or 27, I rented it out, used the equity in it to buy another house did it up, rented it out, then found another bargain with cracks in the walls so big you could put both arms into, we had to jack that one up and redo all the foundations, and so on then I moved into house no.1 we renovated it some more than I moved to a city and sold a couple of houses bought and renovated a few more. I did the whole buy, renovate, and flip houses thing before it was "fashionable" to do so. I don't think you can ever get into real estate soon enough even if it's something that needs work.

 

[lyra]

I was 26 when we bought our first home. I have grown children and we live near Toronto. At this point, it's looking almost impossible for them to EVER buy a house. One doesn't even have it on her radar. The older one (30 this year) is fretting about it. They probably won't be able to afford a townhouse either as we are in a bubble right now. Maybe in their 40's? Maybe not. It's sad.

 

[SMC]

Nowadays, home ownership is really dependent on where you live. I think that it's really hard in certain cities right now (SF, Seattle, NYC) and millennials are fleeing those cities because of housing prices. I live in Seattle and we have friends who moved to Michigan because they could get a house on acres of property for less than $300K. I don't see how it's possible to save $ for a down payment in some of these cities unless you're working for one of the big tech companies, and even then, starting salaries aren't enough if you have to pay rent and save for home!

...or maybe you're eating too much avocado toast?

 

[redwood66]

We bought our first house at 35 because I transferred several times and having to be burdened with the fear of not getting a house sold was too much. We are in our second home now and will probably sell to downsize and move further out in the next 5 years for a home with no mortgage.

 

[Mrs2Ouch]

I bought my first home (a house) as a fix it upper at age 23, in 2003. I do not regret it. It was so much fun picking everything I wanted for this home. It was structurally sound just a little ugly. I ended up selling it for much more than I put in. It was so much fun that the next three homes I have owned I have remodeled to some degree, even when there is nothing wrong with them. Have you thought of buying a structurally sound home that just might not be too pretty and give it a face lift slowly? Assuming you may be looking at pretty homes, of course.

 

[kenny]

I couldn't afford to buy till I was in my 40s.
Even then I could only put down 5% so I had to pay $200 a month for private mortgage insurance to protect the bank if I defaulted.
Since that is money right down the toilet I refinanced ASAP to a 15 yr fixed loan at a great rate since I have a great credit score.

In the long run it was way worth it.
Keep your credit score up so you save money on a lower interest rate.
Those lower payments mean you qualify for a nicer house, or a better location.

IMO a better location can contribute more to a happy life than a nicer house in a worse location.

 

[Trekkie]

19 (2003). I had asked my father to co-sign a loan because I wanted to buy a new car and wanted a lower interest rate. He told me I was crazy, and that if I had money to burn I should buy a house instead.

I called up my maternal grandmother in a fury and ranted about what a stingy arsehole my father was. Her response? "He might be an arsehole, but he's a rich arsehole. Jews know about money. Take his advice and buy the house".

So I did, bitching and whining all the way about wanting to be footloose and fancy free and wanting to travel and not wanting to do something as bourgeois as owning a house.

Well... That house is now worth eight times what I paid, but thanks to drug addiction issues and divorce (didn't listen when my dad told me to get a prenup) in my early twenties, I didn't get to reap the benefit of that.

Not long after that, I fell into a relationship with a very wealthy man who settled property on me (long story ). It took years to extricate myself from that mess.

My husband and I bought a house together when I was 27 and he was 37, and we still live in it today. We are seven years away from our last payment, and that day can't come soon enough. We bought a fixer upper in a good neighbourhood, and it has appreciated in value quite nicely, even with our recession and interest rate issues.

My husband feels he bought quite late (37), so we encourage our friends who want to travel or don't want to be tied down to buy and rent out, because one day they'll wake up and realise they're old and want to put down roots, and might not have the wherewithal to do so. Having owned property now, I can't imagine not doing so.

 

[ac117]

Buying a house....is the most frustrating thing in the world. I sympathize with you madelise!!! We're in NY and it is so hard. We feel the same way you do...moving target is right...we save and save and save and prices just go up or we need more down or don't find what we want. We've already been devastated and screwed over a few times. Ugh....we just got back from vacation and it's back to house hunting. Granted we are very picky and I know if we looked in other areas or loosened our criteria we could get something easily, but why settle?? It's exhausting.

 

[Trekkie]

...or maybe you're eating too much avocado toast?

Avocado toast! The way my FB friends collectively lost their minds at that article! And honestly, the ones who moaned the most are the ones who do daily coffee/deli lunch/Sunday brunch/regular weekend trips away, and HATE it when one points out that they're drinking/eating/sleeping away their down payment.

Now add that to the fact that no one wants to buy a starter home, no one wants a fixer upper - everyone in my social circle wants a 4 bed, 3 bath house with swimming pool in a private estate. The entitlement of "I deserve this" is astounding.

 

[kenny]

... Granted we are very picky and I know if we looked in other areas or loosened our criteria we could get something easily, but why settle??

Why?
To profit from rising prices instead of being screwed by staying locked out.

Start with a house that you can afford TODAY!

 

[SMC]

Avocado toast! The way my FB friends collectively lost their minds at that article! And honestly, the ones who moaned the most are the ones who do daily coffee/deli lunch/Sunday brunch/regular weekend trips away, and HATE it when one points out that they're drinking/eating/sleeping away their down payment.

Now add that to the fact that no one wants to buy a starter home, no one wants a fixer upper - everyone in my social circle wants a 4 bed, 3 bath house with swimming pool in a private estate. The entitlement of "I deserve this" is astounding.

I'm of the camp that believes that even if one stuffed themselves silly with avocado toast in the Bay Area, one would still not be able to afford a house there. Yes, there are some people that spend excessively and could never afford anything anywhere, but the people that I know in SF and in Seattle aren't like that and they just can't afford anything even if they did save and save and save. They make 6 figures and I wouldn't consider them spendthrift in any means.

I saw a home for sale in Burlingame, CA (a decent Bay Area neighborhood) that was $1.4m that would be considered a "starter" home. It was a house with 3 beds and 1 bath, <1400 sq ft, and it was pretty old too (1942) and not recently updated. I just don't see how young people, likely with student debt, would be able to save the standard 20% in a decent amount of time, especially with the rents in the Bay Area also costing $4-5K per month.

I'm in my mid-30s. The only people that I know who have bought in the Bay Area within the past 5 years have all received help from their parents.

We were lucky that my husband bought his first house in Seattle right around the time of the 2008 recession. We were able to sell it this year for almost twice what we paid for it and buy a newer, bigger home. Buying a home in Seattle was tough too - we bid on 7 properties, all of which went for above list price, before we finally got one.

So, madelise, I understand the frustration that you feel. If I remember correctly, you also live in one of these tough housing markets. I don't see housing becoming more affordable in some of these cities without some drastic economic change, and that would probably be bad for everyone.

 

[kenny]

Let's say you've saved $20,000.
At the usual 20% down you can afford (with the credit score and income) a $100,000 house.
But you can't find an acceptable house at that price so you wait.
Next year you've saved 10% more but housing prices went up 15%.

Had you settled for a $100,000 house last year it would now be worth $115,000 and you'd have lowered your income tax with that nice mortgage deduction.
You'd be one year closer to living in a paid off house.
... and the magic is your $20,000 has grown by $15,000 ... you now have $35,000 in equity!
Imagine earning 75% interest on a savings account!

Just buy something today, even a tiny condo in a marginal location.
If still available get PMI, private mortgage insurance; you'll get into a better house with a smaller down payment.
Remember, it's the price of the house that your return is based on ... not your down payment..
It's about OPM, making money by using Other People's Money.
Consider accepting a higher interest rate to get a lower down payment.
Just check for a prepayment penalty clause so you'll be able to refinance in a couple years to a better loan.

Stop the bleeding.
Buy something ASAP.

 

[alene]

We're in Brooklyn where home ownership is kind of a luxury. We bought our first apartment in our mid (me) and late (dh) 30s and were among the first among our peers to buy. We were only able to buy an actual house 2 years ago (almost 40 for me) because our apartment appreciated so much and we moved to a somewhat more affordable neighborhood. If it were just my salary, i'd still be renting.