7 ms·

20% down would mean even fewer millennials would be able to buy a house. I don't know anyone that has 40k sitting around in their bank accounts for a 20% down p

by VT_Drew 11y ago

20% down would mean even fewer millennials would be able to buy a house. I don't know anyone that has 40k sitting around in their bank accounts for a 20% down payment on 200k starter home.

zardo 11y ago
I can save 40k, finding a home for only 200k is a laugh though.
- Nadya 11y ago
  Look in Maine. My mother is moving to a house that is roughly 180k on a decent chunk of land. The issue is she works from home and someone tied to a corporate office in SF might not have the luxury of moving out east.
  - douche 11y ago
    It's going to get even cheaper in the next year or so in Maine. Several major paper mills have just announced huge layoffs or have closed their doors. In Franklin County (approximately 35000 people, and about 1/16th of the state), the Verso mill laid off 300 employees, along with 100 logging contractors. Spider that out to the service, supply, and transport jobs that are going to go away as a result of this, and you are talking thousands of jobs that are going away, and there's no other industry to absorb those losses. Real-estate is already dirt-cheap up there - a home that would sell for half a million in Boston or a million in SFO can be bought for less than 150k. It's going to crater even harder. If anybody likes to ski and can work remotely, I've got a couple of houses for < $100,000 in the family that are a half-hour from Sugarloaf or Sunday River...
- Phlarp 11y ago
  Minneapolis reporting in, 200k houses abound. But hey fuck us flyover states-- what with our high paying jobs and affordable housing
  - eric_the_read 11y ago
    Flyover states? Like... Virginia? http://www.businessinsider.com/which-states-are-flown-over-the-most-2014-10 http://www.businessinsider.com/which-states-are-flown-over-t... Just kidding, I'm in flyover country as well (Colorado), though our real estate is much less affordable than yours, it sounds like.
- toomuchtodo 11y ago
  I can get a $180K 3 bed, 2 bath home 15 minutes from Clearwater Beach in Florida, while making top dollar engineer salary for a remote company.
bkeroack 11y ago
In my market (southern California), 20% down is more like $100k+.
bdcravens 11y ago
FHA loans are still a thing, as are sub-$200K houses ($150k buys you a lot of house in Houston or Dallas)
msandford 11y ago
20% down wouldn't just mean millenials wouldn't be able to buy houses, tons of people wouldn't be able to buy houses. Which would then lead prices to fall such that the market started to clear again. Part of the reason housing prices went up so much in the last 20 years is falling interest rates, but another is the reduction in down payment. Here is an article from 1990 that talks about conventional loans being 20% down: http://articles.latimes.com/1990-05-13/realestate/re-252_1_va-loan http://articles.latimes.com/1990-05-13/realestate/re-252_1_v... It would be similar if government backed college loans suddenly vanished. The first year colleges would have very few students enroll and they'd have to figure out how to slash tuition by 50-90% (depending on how expensive they are) and the next year when people could afford to attend without spending buying-a-house amounts of money enrollment would get back towards normal. It's not that 20% down would directly make housing more affordable, in the short run you're absolutely right that it would make it far more unaffordable. But in the long run, as the parent said, it would ground the market in rational valuations instead of crazy ones.
- jazzyk 11y ago
  This (x100). A lot of otherwise highly educated people I know just cannot understand this simple economic rule of supply/demand.
fein 11y ago
I had $60k sitting in my account for my first house. I just closed at $265k. It's doable, but with a lead dev salary in NE Ohio. This is neither common nor really acceptable, but I worked hard to save my money.
- irishcoffee 11y ago
  I close on the 30th actually in the baltimore/dc metro area. 265k cost-of-house, 20% down. I saved and saved and saved. It was very hard.
  - fein 11y ago
    Yep, this was effectively the culmination of saving as much as I could from graduation in dec 2011 to now. I'm pretty happy I managed to save this much, but it would not have been possible had I not been headhunted into what can only be called a dream job for a 28 year old from my area. My wife only makes around $20k/year, maybe less, so this is almost entirely coming out of my pocket.
morgante 11y ago
Heh, the 20% seems like the easy part. It's finding a home for $200k or <$1M in a good job market that's impossible.
dogma1138 11y ago
The percentage is meaningless lowering it to say 0% while keeping the current market prices means that people still can't afford housing and will default on their loans. Leave it at 20% heck raise it to 50% as long as you can have affordable housing. If your first housing will cost 5 years of the median wage no one will have issues buying it, when a house costs 20 years, in which you need to pay rent, feed yourself, get married and have kids no one will every get into the market unless they get help form their parents or strike gold.

by VT_Drew 11y ago

20% down would mean even fewer millennials would be able to buy a house. I don't know anyone that has 40k sitting around in their bank accounts for a 20% down payment on 200k starter home.

zardo 11y ago

I can save 40k, finding a home for only 200k is a laugh though.

Nadya 11y ago
Look in Maine. My mother is moving to a house that is roughly 180k on a decent chunk of land. The issue is she works from home and someone tied to a corporate office in SF might not have the luxury of moving out east.
- douche 11y ago
  It's going to get even cheaper in the next year or so in Maine. Several major paper mills have just announced huge layoffs or have closed their doors. In Franklin County (approximately 35000 people, and about 1/16th of the state), the Verso mill laid off 300 employees, along with 100 logging contractors. Spider that out to the service, supply, and transport jobs that are going to go away as a result of this, and you are talking thousands of jobs that are going away, and there's no other industry to absorb those losses. Real-estate is already dirt-cheap up there - a home that would sell for half a million in Boston or a million in SFO can be bought for less than 150k. It's going to crater even harder. If anybody likes to ski and can work remotely, I've got a couple of houses for < $100,000 in the family that are a half-hour from Sugarloaf or Sunday River...
Phlarp 11y ago
Minneapolis reporting in, 200k houses abound. But hey fuck us flyover states-- what with our high paying jobs and affordable housing
- eric_the_read 11y ago
  Flyover states? Like... Virginia? http://www.businessinsider.com/which-states-are-flown-over-the-most-2014-10 http://www.businessinsider.com/which-states-are-flown-over-t... Just kidding, I'm in flyover country as well (Colorado), though our real estate is much less affordable than yours, it sounds like.
toomuchtodo 11y ago
I can get a $180K 3 bed, 2 bath home 15 minutes from Clearwater Beach in Florida, while making top dollar engineer salary for a remote company.

bkeroack 11y ago

In my market (southern California), 20% down is more like $100k+.

bdcravens 11y ago

FHA loans are still a thing, as are sub-$200K houses ($150k buys you a lot of house in Houston or Dallas)

msandford 11y ago

20% down wouldn't just mean millenials wouldn't be able to buy houses, tons of people wouldn't be able to buy houses. Which would then lead prices to fall such that the market started to clear again. Part of the reason housing prices went up so much in the last 20 years is falling interest rates, but another is the reduction in down payment. Here is an article from 1990 that talks about conventional loans being 20% down: http://articles.latimes.com/1990-05-13/realestate/re-252_1_va-loan http://articles.latimes.com/1990-05-13/realestate/re-252_1_v... It would be similar if government backed college loans suddenly vanished. The first year colleges would have very few students enroll and they'd have to figure out how to slash tuition by 50-90% (depending on how expensive they are) and the next year when people could afford to attend without spending buying-a-house amounts of money enrollment would get back towards normal. It's not that 20% down would directly make housing more affordable, in the short run you're absolutely right that it would make it far more unaffordable. But in the long run, as the parent said, it would ground the market in rational valuations instead of crazy ones.

jazzyk 11y ago
This (x100). A lot of otherwise highly educated people I know just cannot understand this simple economic rule of supply/demand.

fein 11y ago

I had $60k sitting in my account for my first house. I just closed at $265k. It's doable, but with a lead dev salary in NE Ohio. This is neither common nor really acceptable, but I worked hard to save my money.

irishcoffee 11y ago
I close on the 30th actually in the baltimore/dc metro area. 265k cost-of-house, 20% down. I saved and saved and saved. It was very hard.
- fein 11y ago
  Yep, this was effectively the culmination of saving as much as I could from graduation in dec 2011 to now. I'm pretty happy I managed to save this much, but it would not have been possible had I not been headhunted into what can only be called a dream job for a 28 year old from my area. My wife only makes around $20k/year, maybe less, so this is almost entirely coming out of my pocket.

morgante 11y ago

Heh, the 20% seems like the easy part. It's finding a home for $200k or <$1M in a good job market that's impossible.

dogma1138 11y ago

The percentage is meaningless lowering it to say 0% while keeping the current market prices means that people still can't afford housing and will default on their loans. Leave it at 20% heck raise it to 50% as long as you can have affordable housing. If your first housing will cost 5 years of the median wage no one will have issues buying it, when a house costs 20 years, in which you need to pay rent, feed yourself, get married and have kids no one will every get into the market unless they get help form their parents or strike gold.