Why Aren't Young People Buying More Houses?

[mriddick]

You both like to put my argument in the best case scenario and your argument in the worst case.

You can buy a home on the cheap cheap right now - foreclosures for example. That situation supports my argument in spades. Renting is throwing your money away - not matter what the situation.

Nothing wrong with the 800 square foot cabin, but good luck selling that to the wife... if you have one. They tend to want a few specifics in the house...

At times I think you take this stuff way too personal, its an opinion not an argument and nothing I said originally about homes losing value was in response to anything you wrote. It really is one reason people aren't buying today IMO.

[O.S.O.K.]

Where do you guys live that you can rent cheaper than you can buy for? Monthly payment-wise?

When you rent, 100% of your rent money goes "poof".

How can you even compare renting with paying down a loan?

It only makes sense if you plan on moving, or think you income will drop lower, etc. that kind of thing. It's not always the best to buy but in a situation where you expect to stay put for a period of time, it is.

Now, if you want to talk about the expected prices of houses, then I have said myself that renting for the time being may very well be better... BUT even if house prices fall a lot, we will also more than likely be looking at very high interest rates on the mortgage loans as well and your damned payment will be high anyway - to pay the friggen interest... So, it's hard to "win" in the situation that we find ourselves.

If you can get into something that you own flat-out, that's the best. And then, all that we need to worry about is tax rates and confiscation....

[mriddick]

I have read alot of arguments against buying a home. One of them is that over a lifetime the stock market is going to appreciate at a faster value than real estate and if you took the difference between what you spend on a mortgage and what you pay for rent and invested it you'd be better off.

Well I dont have the discipline to invest that "extra" money, which around here right now it is a little cheaper to buy than to rent especially when you factor in the interest and property tax, tax writeoff.

Also if you rent, at the end of 30 years you have nothing. If you buy, you at least have property, no matter what its worth, its more than nothing.

Also, the housing portion of my expenses is now fixed. My monthly payment is the same as it will be 20 years from now. (our property tax is fixed in this state). The cost to rent will go up over time.

It's not purely a financial decision, and as a financial decision it may even be a poor one.

I'd like to note I didn't say never buy a home, what I said IMO is right now many rushing to buy something are buying wrong.

[O.S.O.K.]

At times I think you take this stuff way too personal, its an opinion not an argument and nothing I said originally about homes losing value was in response to anything you wrote. It really is one reason people aren't buying today IMO.

No, I don't take it personal. It just buggs me when people change the parameters in order to justify their argument -but fail to note that - just so they can be right.

Nothing personal

And don't you own a home? And didn't you just purchase land? Just sayin...

[O.S.O.K.]

Edited - reread Napot's post. He's arguing the same thing as me basically....

[mriddick]

I own 3 homes, all paid for with cash, as I said I think most are better saving up and buying what they like. Paying interest never made sense to me. If you'd take the time to read what I've been writing it's not don't buy a home, but rather save up, buy the right home, at the right time for the right price.

[O.S.O.K.]

You own three homes but coucil renting.... I take it two of these homes are rented out?

[insider]

The problem is a lot of jobs which supported the 18-30 year old crowd have been shipped overseas, now with no job prospects, and no money, how can they buy a house?

[O.S.O.K.]

I don't think that's it... here's the unemployment numbers for 2010 by age group: http://www.bls.gov/cps/cpsaat3.pdf

While the unemployment for the younger people is 3 points higher, its not that much higher - not enough to explain why they aren't buying homes...

[Kadmos]

No, I don't take it personal. It just buggs me when people change the parameters in order to justify their argument -but fail to note that - just so they can be right.

Nothing personal

And don't you own a home? And didn't you just purchase land? Just sayin...

Seems to me the topic is younger people not buying homes. We are discussing the various reasons why that might be.

The reasons are the parameters, which are different for different people.

You seem to be of the mindset that buying a home is "the right thing to do". But it just isn't the case for everyone.

In fact the point of the article is that the younger generation seems to find it to be less the case for more of them.

As to renting cheaper, I pay in rent 1/4th of what I put out monthly in home ownership. My rent is literally cheaper than my utilities were when I owned.

Obviously I have lesser needs though alone.

I'm not even saying I'm sorry I owned. I bought a great desirable location well before the market started to rise. I got a great price on it as it needed some work, that I was able to do 90% of on my own. My house was up 3 times what I paid when I cashed out (shortly after the crash). I made a nice profit on it.

Now, my ex, who insisted on keeping it will have to pay about 6 years just to break even with her half of that investment, it will likely be 12 years before she again is at a break even point. In the end she'll probably make out ok, nothing spectacular, but if she holds on she'll get her money back and likely make a profit.

Then again, had we actually tried to just sell it, it may have sat for long enough that we both would have lost out in the long and short run.

[mriddick]

You own three homes but coucil renting.... I take it two of these homes are rented out?

Nope I don't like to rent to others. One house is my wife's, one is mine, one is a house I use in another state for work. In the long run I plan on retiring to my cabin I hopefully will start building next year. You know I'm not really saying rent for a lifetime, only that right now in many areas housing is still losing value, because of that I would look very close at buying now VS saving up and getting an even better deal in the long run.

[O.S.O.K.]

OK, I can agree with that too - depending on the area.

[insider]

I had renters cause $10,000 in damage to my house, one of them had the nerve to demand their rent back! I gave the house to my daughter, she keeps the place immaculate.

[coppertales]

why buy a house. The ex wife will end up with it. I bought my first house when I was 30. It cost me 13500 and had an apartment upstairs that paid the mortgage. I sold it two years later and bought another house. Ten years later I sold that house and bought another. Then I got transferred back to Texas so I had to sell that one. I made good money on all of them. Now to sell this house in the city and move to my two other seasonal houses in the country. No more city life, shoveling snow, or 100 degree days for this guy.

Besides, obummer has cut back on all that free money, no down payment, and allowed to buy much more house than you can afford..........chris3

[5.56NATO]

Why buiy when the rates are going to go up? Why buy when the market is highly overvalued even today? Why not wait till you can buy for pennies on the dollar or even better? Also, how does one pay property taxes when, after a complete economic collapse, one has no job and no money?

[samiam]

some parts of the country the market may have stabilized but in most places it hasn't hit bottom yet

[O.S.O.K.]

Like I said earlier. Unless you have cash in the bank and can buy outright, when the values fall more, the mortgage rates are likely to be much higher.

Best to find a foreclosure right now if you can... IMHO

If you've forgotten or never experienced the effect of high interest rates on your mortgage payments.... just plug the numbers into a mortgage calculator:

Assumptions: $150K house loan, 30-year loan.
Monthly payments for a given interest rate:
4% $716.12
5% $805.23
6% $899.33
7% $997.95
8% $1,100.65
9% $1,206.93
10% $1,316.36
11% $1,428.49 (this is now double the 4% rate)
12% $1,542.92 (I actually had a mortgage at this rate at one time... our first house)
13% $1,659.30
14% $1,777.31
15% $1,896.67

Now, anybody that thinks the mortgage rates "can't possibly go that high" are just not paying attention... or simply have not researched this enough...

Now, let's say the house drops to $100K value and you can buy it at that... vs. buying now at $150K:

$150K at 4% payment is: $716.12 (over life of loan $257,803.20)
$100K at 12% payment is: $1028.61 (over life of loan $370,299.60)

The house that's now $150K would have to drop to $70K value before the higher interest rate would allow a BREAK EVEN.

Just some realities to think about.

And again, you almost have to have higher interest rates in an environment that devalues the houseing values too.

[Solidus-snake]

We bought our first house in Sep 2010 at the ages of 21. Fixed rate interest of 5% and taxes are added into the monthly payment.

Were pretty happy, especially since rent around here is just $100 less WITHOUT utilities.

[O.S.O.K.]

Good for you! Seriosly, to be paying down your own mortgage is much better than to be paying down someone else's. Unless you need flexibility...

Unless you're a "migrant", renting should always be temporary IMHO.

[Solidus-snake]

Unless you're a "migrant", renting should always be temporary IMHO.

I very much agree. Better to be buying something for myself instead of just giving just slightly less money to someone else.