6 ms·

Millennials Want to Buy Homes but Aren’t Saving for Down Payments

10 points by spking 9y ago

quxbar 9y ago
Ambiguous use of 'cannot' versus 'are not' all over this article.
- nxsynonym 9y ago
  This. As a millennial buried in student debt I can hardly afford to put any money aside for a emergency fund, let alone a down payment on a house. Unless I get a major pay bump or cost of living reduction, I'm currently on track to pay almost 200% of my initial borrowed amount. All that money that could have gone towards a down payment will instead go towards a degree that I was told was necessary to "make a living". So my options are either find someone willing to loan me the down payment amount at an insane interest rate, or continue to throw money into the trash by paying rent.
  - derekp7 9y ago
    Trust me, home ownership isn't much better than throwing money at rent (depending on the market of course). Property taxes, insurance, maintenance, plus interest and PMI all dominate your monthly housing expenses -- the few drops that go into principle don't amount to hardly anything for the first 10 years or so. In my case, the numbers looked good in the beginning. But then insurance went up 5x, property tax more than doubled, and the market tanked. Took a long time to get out of that situation.
Yhippa 9y ago
I'm finding that the "web" link bypass option no longer works for me. I even tried it in Chrome incognito mode. Is anyone else having this problem?
- basch 9y ago
  https://outline.com/GERRCs https://outline.com/GERRCs
  - Yhippa 9y ago
    Thanks for showing me that. I've also been looking for a good reader plugin for Chrome but this website does the trick!
    - basch 9y ago
      I like mercury https://mercury.postlight.com/ https://mercury.postlight.com/ I've also had good luck with extensions built on https://www.diffbot.com/ https://www.diffbot.com/
AdmiralAsshat 9y ago
I have enough saved for a full 20% down payment, but I still can't afford a home in this area because the mortgage would go above the recommended 30% of my income. But apparently that's still my fault, because Millennials Deserve Their Suffering.
- notadoc 9y ago
  You probably eat avocado too, you extravagant spendthrift you.
- mcbruiser3 9y ago
  30% is what's recommended. find another lender who allows DTI ratios up to 40%.
- BrailleHunting 9y ago
  For first time purchases, there's the FHA program. Also, it maybe cheaper to rent than to buy. Or move to a more affordable area with a much shorter commute. Some people commute for hours just to say they own a home while they spend much more of their lives and more money driving for hours. Next, some people just say "fuck it," buy a Sprinter or GMC Savannah and convert it to a commute vehicle / stealth RV. No rent, no mortgage and not piling on more debt to be a servant to for the next 15 to 30 years. Inflation is the friend of the debtor, deflation and hyperinflation are the enemies. Also consider property taxes of the future: they may greatly increase depending on political and economic conditions, especially if a "Greece" national, state, county or city debt default situation comes to pass, or expenditures like another large war occurs. Finally, if a local housing market changes significantly it is possible to go underwater, even without climate change. In which case, people get trapped and may lose their homes. There are also legal, quasilegal and extralegal foreclosure risks which can wipe away equity. https://www.trulia.com/rent_vs_buy/ https://www.trulia.com/rent_vs_buy/ https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...
notadoc 9y ago
This is obviously a regional phenomena. In the bay area, a small starter home is $2 million. In Seattle, a small starter home in a half-decent area is $700,000 In Portland, a small starter home in a half-decent area is $500,000 The price to income ratio is way off in any half-desirable west coast city or suburb, whether you save for the downpayment or not doesn't matter if the average income won't support the payment. It's also going to take quite some time for most people to save for a down payment at those house prices, unless they get a boost from options, RSUs, maybe the Bank of Rich Mom & Dad, etc. Meanwhile in Greenbay Wisconsin or any other midwestern city, starter homes are $120,000 or so. Go to the south, and the costs are even less.
- mcbruiser3 9y ago
  > In the bay area, a small starter home is $2 million. wrong. I live in the BA and you can get a reasonably nice 3/2 for between 600-800. Not in SF proper, but just a bit North, still in the BA. And if you go a bit further out to Vallejo or Fairfield, you can get a house for 400-500. Totally doable. Also, I bought my first home in 2005 way outside the BA in Tahoe because it was all I could afford, but I still ownd it and got all the tax benefits. I could also rent it out, save more money and trade up later. You just have to work a bit smarter and harder, and stop complaining.
  - notadoc 9y ago
    You commuted from Tahoe to the bay area? > And if you go a bit further out to Vallejo or Fairfield Do you consider a 130 mile roundtrip commute reasonable? Anyway, it's nice to know you can live in the extended region for much less than Seattle or Portland, both of which are totally overpriced and overrated with terrible weather.
    - mcbruiser3 9y ago
      No, I only owned property in Tahoe, and continued to rent my primary residence. My point is that I was a "homeowner". Not sure where you are commuting to, but from Vallejo to SF is only 30 miles, and yes, I did it. If you are on the peninsula I would not consider Vallejo, but then there are other places further South that are probably also similarly priced.
Apreche 9y ago
With my NYC salary and ALSO saving for down payment I obviously still can't afford to own any NYC real estate. I have friends who do own houses out in suburban and rural areas. While it is expensive for them, because they do not have NYC salaries, I could afford their homes quite easily. Their monthly payments are often a fraction of my rent. The problem is that if I move out to the sticks, my salary will also go way way down. If anyone knows how I can make NYC money and not live in NYC, let me know. Actually, never mind. I would rather keep paying rent and not owning than live outside NYC. What do I care anyway if I pay monthly rent or monthly mortage payments? I have food, shelter, and everything else. Who cares that I don't technically own the place I live in?
relics443 9y ago
My wife and I are about to close on a starter home in the NYC area. We put down 20%. We're in our mid 20s. We have a circle of friends all about the same age as us, all coming from the same SES origin as us (low-to-mid middle class), who complain non-stop about how they can't afford a house in our neighborhood. My wife and I both started college at 18, and graduated in 2-3 years (CS for me, BSN for her). We worked the whole time we were in college, and ever since graduating. She's currently getting her NP, and I'm still paying off loans from graduate school. Of our friends, only one has a professional job (RN). Only one other graduated college (financial analysis), but chooses to work as a nanny a few hours a day so that she can have time to herself. The rest are employed in low level jobs, and have no college degree (no intention to get one, or still trying to "figure out what degree they want"). ¯\_(ツ)_/¯
- antisthenes 9y ago
  I'm not sure if it's supposed to be a humblebrag or an example of survivorship bias, or both, but thank you for sharing the experience with us.
  - relics443 9y ago
    It was my nice way of saying that in my experience millenials tend to make it difficult for themselves to succeed financially, and then question why they don't have more money. I tried gently broaching the topic with my friends once. One friend who is a low level customer service rep that never attended college responded "I have a job, you have a job. We work the same amount [we don't]. Why are you able to afford to buy a house, and I can't?"
    - antisthenes 9y ago
      I work with customer service reps on a daily basis. Their work ethic is vastly different depending on the person. Some customer service reps should be able to afford a house, while others probably shouldn't. > I tried gently broaching the topic with my friends once. One friend who is a low level customer service rep that never attended college responded "I have a job, you have a job. We work the same amount [we don't]. Why are you able to afford to buy a house, and I can't?" And what insights did you garner from that interaction aside from your thinly veiled sense of superiority?
bayangan 9y ago
My government just says I need to get a better paying job.

10 points by spking 9y ago

quxbar 9y ago

Ambiguous use of 'cannot' versus 'are not' all over this article.

nxsynonym 9y ago
This. As a millennial buried in student debt I can hardly afford to put any money aside for a emergency fund, let alone a down payment on a house. Unless I get a major pay bump or cost of living reduction, I'm currently on track to pay almost 200% of my initial borrowed amount. All that money that could have gone towards a down payment will instead go towards a degree that I was told was necessary to "make a living". So my options are either find someone willing to loan me the down payment amount at an insane interest rate, or continue to throw money into the trash by paying rent.
- derekp7 9y ago
  Trust me, home ownership isn't much better than throwing money at rent (depending on the market of course). Property taxes, insurance, maintenance, plus interest and PMI all dominate your monthly housing expenses -- the few drops that go into principle don't amount to hardly anything for the first 10 years or so. In my case, the numbers looked good in the beginning. But then insurance went up 5x, property tax more than doubled, and the market tanked. Took a long time to get out of that situation.

Yhippa 9y ago

I'm finding that the "web" link bypass option no longer works for me. I even tried it in Chrome incognito mode. Is anyone else having this problem?

basch 9y ago
https://outline.com/GERRCs https://outline.com/GERRCs
- Yhippa 9y ago
  Thanks for showing me that. I've also been looking for a good reader plugin for Chrome but this website does the trick!
  - basch 9y ago
    I like mercury https://mercury.postlight.com/ https://mercury.postlight.com/ I've also had good luck with extensions built on https://www.diffbot.com/ https://www.diffbot.com/

AdmiralAsshat 9y ago

I have enough saved for a full 20% down payment, but I still can't afford a home in this area because the mortgage would go above the recommended 30% of my income. But apparently that's still my fault, because Millennials Deserve Their Suffering.

notadoc 9y ago
You probably eat avocado too, you extravagant spendthrift you.
mcbruiser3 9y ago
30% is what's recommended. find another lender who allows DTI ratios up to 40%.
BrailleHunting 9y ago
For first time purchases, there's the FHA program. Also, it maybe cheaper to rent than to buy. Or move to a more affordable area with a much shorter commute. Some people commute for hours just to say they own a home while they spend much more of their lives and more money driving for hours. Next, some people just say "fuck it," buy a Sprinter or GMC Savannah and convert it to a commute vehicle / stealth RV. No rent, no mortgage and not piling on more debt to be a servant to for the next 15 to 30 years. Inflation is the friend of the debtor, deflation and hyperinflation are the enemies. Also consider property taxes of the future: they may greatly increase depending on political and economic conditions, especially if a "Greece" national, state, county or city debt default situation comes to pass, or expenditures like another large war occurs. Finally, if a local housing market changes significantly it is possible to go underwater, even without climate change. In which case, people get trapped and may lose their homes. There are also legal, quasilegal and extralegal foreclosure risks which can wipe away equity. https://www.trulia.com/rent_vs_buy/ https://www.trulia.com/rent_vs_buy/ https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...

notadoc 9y ago

This is obviously a regional phenomena. In the bay area, a small starter home is $2 million. In Seattle, a small starter home in a half-decent area is $700,000 In Portland, a small starter home in a half-decent area is $500,000 The price to income ratio is way off in any half-desirable west coast city or suburb, whether you save for the downpayment or not doesn't matter if the average income won't support the payment. It's also going to take quite some time for most people to save for a down payment at those house prices, unless they get a boost from options, RSUs, maybe the Bank of Rich Mom & Dad, etc. Meanwhile in Greenbay Wisconsin or any other midwestern city, starter homes are $120,000 or so. Go to the south, and the costs are even less.

mcbruiser3 9y ago
> In the bay area, a small starter home is $2 million. wrong. I live in the BA and you can get a reasonably nice 3/2 for between 600-800. Not in SF proper, but just a bit North, still in the BA. And if you go a bit further out to Vallejo or Fairfield, you can get a house for 400-500. Totally doable. Also, I bought my first home in 2005 way outside the BA in Tahoe because it was all I could afford, but I still ownd it and got all the tax benefits. I could also rent it out, save more money and trade up later. You just have to work a bit smarter and harder, and stop complaining.
- notadoc 9y ago
  You commuted from Tahoe to the bay area? > And if you go a bit further out to Vallejo or Fairfield Do you consider a 130 mile roundtrip commute reasonable? Anyway, it's nice to know you can live in the extended region for much less than Seattle or Portland, both of which are totally overpriced and overrated with terrible weather.
  - mcbruiser3 9y ago
    No, I only owned property in Tahoe, and continued to rent my primary residence. My point is that I was a "homeowner". Not sure where you are commuting to, but from Vallejo to SF is only 30 miles, and yes, I did it. If you are on the peninsula I would not consider Vallejo, but then there are other places further South that are probably also similarly priced.

Apreche 9y ago

With my NYC salary and ALSO saving for down payment I obviously still can't afford to own any NYC real estate. I have friends who do own houses out in suburban and rural areas. While it is expensive for them, because they do not have NYC salaries, I could afford their homes quite easily. Their monthly payments are often a fraction of my rent. The problem is that if I move out to the sticks, my salary will also go way way down. If anyone knows how I can make NYC money and not live in NYC, let me know. Actually, never mind. I would rather keep paying rent and not owning than live outside NYC. What do I care anyway if I pay monthly rent or monthly mortage payments? I have food, shelter, and everything else. Who cares that I don't technically own the place I live in?

relics443 9y ago

My wife and I are about to close on a starter home in the NYC area. We put down 20%. We're in our mid 20s. We have a circle of friends all about the same age as us, all coming from the same SES origin as us (low-to-mid middle class), who complain non-stop about how they can't afford a house in our neighborhood. My wife and I both started college at 18, and graduated in 2-3 years (CS for me, BSN for her). We worked the whole time we were in college, and ever since graduating. She's currently getting her NP, and I'm still paying off loans from graduate school. Of our friends, only one has a professional job (RN). Only one other graduated college (financial analysis), but chooses to work as a nanny a few hours a day so that she can have time to herself. The rest are employed in low level jobs, and have no college degree (no intention to get one, or still trying to "figure out what degree they want"). ¯\_(ツ)_/¯

antisthenes 9y ago
I'm not sure if it's supposed to be a humblebrag or an example of survivorship bias, or both, but thank you for sharing the experience with us.
- relics443 9y ago
  It was my nice way of saying that in my experience millenials tend to make it difficult for themselves to succeed financially, and then question why they don't have more money. I tried gently broaching the topic with my friends once. One friend who is a low level customer service rep that never attended college responded "I have a job, you have a job. We work the same amount [we don't]. Why are you able to afford to buy a house, and I can't?"
  - antisthenes 9y ago
    I work with customer service reps on a daily basis. Their work ethic is vastly different depending on the person. Some customer service reps should be able to afford a house, while others probably shouldn't. > I tried gently broaching the topic with my friends once. One friend who is a low level customer service rep that never attended college responded "I have a job, you have a job. We work the same amount [we don't]. Why are you able to afford to buy a house, and I can't?" And what insights did you garner from that interaction aside from your thinly veiled sense of superiority?

bayangan 9y ago

My government just says I need to get a better paying job.