Buying a house????

[Disney Ella]

DH and I talk about how hard it must be for younger people trying to buy a house all the time. There's no way we could afford to buy the small house we have if we bought it now. Real estate prices have risen so much more than salaries have. One of DDs classmates' parents sold their house to a young couple and both sets of parents contributed money to the downpayment so that they could afford it. If you live near a city and don't have high-powered jobs, I don't know how you afford even basic houses.

 

[Christine]

Well, if it makes you any better, I bought my first home in 1988 and, I swear, it wasn't any easier. DH and I were 27 years old and not making much at all. He was an apprentice electrician making about $7.00 an hour (but we knew it would drastically increase in the short-term). I think I was making about $27,000. The house we bought was $109,000. The *only* way that we got in was that my parents gave me part of my grandmother's money that she left when she died. That was my downpayment (like $6,000, I think).

My point is, for your first home, you are probably going to go in on the "skin of your teeth" so to speak AND you are probably going to have to buy something you TOTALLY DO NOT WANT--like a condo or townhouse/rowhouse. Unless you're rolling in dough, you must start at the bottom with home ownership.

I also agree with mickman1962--I do think that *other* expenses are much higher than they were back in the 80s and that younger people have become accustomed to a higher standard of living than they used to. Now, I saying that in the general sense. I know from reading these boards, that there are many young folks that are very frugal and responsible money managers--I just have yet to come across them where I work or live. They want and have all the neat gadgets and can't wait for them.

 

[mickeyfan2]

just heard a news report on a bay area radio station the other day-realtors are getting worried that if the california market flattens or drops existing home owners who want to sell (and have the zero down loans) won't be able to cover even a minimal sales commission.

This is something that I have not thought about in a housing bubble. That would make it harder to sell the house. Why show a house that will not yield much commision when you can show one that will yield a nice commision.

 

[Alicnwondrln]

we live near boston and its crazy on of the neighbors just solf thers home nice but nothing special and it would need work
over 400,000
i wa shocked housing is thru the roof here
we are looking to maybe move in the next couple years before the baby is 5

 

[Bob Slydell]

Not saying housing is not overpriced right now, but younger people seem different now then when I bought my first house 20 years ago. My nephews are constantly complaining how they can't afford to buy a house. They can however afford to buy $30K+ new cars for them and their wives. They have High Def. plasma TV's, go on vacation 2 times a year etc. etc. etc... When we bought our first house we both drove older cars with no car payment.

ITA I also think people's ideas of their first home have changed over time too -- more and more people are looking for that dream home right off the bat, something that needs no work and that they can just move right into.

 

[stinkerbelle]

We went from apts., to cheap house, to another house, and now we are in the 300,000 house.
It is called house hopping. You take a gamble and buy, and hope you build equity and sell for a profit.

Ditto. This is what we did. We bought our first house (before we got married) in a decent area of a "city"...houses were cheap, taxes were high. (this was in 2000)

We sold that house, made a profit, and were able to afford the "big" house. (bought it in 2003) We actually built this one...it has everything and more. Except - house is in the BOONIES.

And we are nowthinking of selling this house, for a smaller house in the town we ultimately want to live in...we NEVER could have gone right to this town with our first (or even second) house and gotten ANYTHING decent. (it would have been a SHACK) Now, we should make a decent profit off of our current house to afford something nice in the other town. not brand spanking new like the house we live in now...or close to it's size...but something more mangeable.

Yes - it's a gamble..but it's the "real estate game". 3 houses in 6 years? oye.

 

[nealymouse]

Not saying housing is not overpriced right now, but younger people seem different now then when I bought my first house 20 years ago. My nephews are constantly complaining how they can't afford to buy a house. They can however afford to buy $30K+ new cars for them and their wives. They have High Def. plasma TV's, go on vacation 2 times a year etc. etc. etc... When we bought our first house we both drove older cars with no car payment. We literally ate Kraft mac and cheese every day for the first 2 years. It took us 5 years just to furnish the house. We made huge sacrifices, we drove older cars, we didn't buy each other presents, no big vacations, no eating out. Again not saying it's all younger people, but most that I know want to have it all right away without willing to give things up. My advice is do whatever you have to do to buy that first house no matter how small it is, sell the SUV, you don't need the $1200 skis/ $1000 golf clubs $4000 TV's (again my nephews). Then as someone said start house hopping your way up and with patience and perseverance you will be rewarded.

Yes I agree 100% with your post Mickman 1962 . When my Dh and bought our 1st home in 1982 it was a trailer house. We ate spaghetti daily and hot dogs were a real treat. We knew this was just a pit stop and stayed 2 yrs saving what we could for our next home. There were no extras in our life at this time. No vacations, no new cars, Our furniture was on layaway for 5 years (really was LOL)

I heard on the radio yesterday that Banks are now giving 50 yr mortages. On a 100K loan it only saved you $100.00 a month but added 20 years. Scarry.

 

[BARBARAAPPLE]

I am from Greensboro NC and the houses are not to bad here compared to other cities
1 house we looked at in our neighborhood was 2100 sq feet for around $185000 and it is 5 years old that thats out in the country ...

 

[Toby'sFriend]

if you insist on staying in Barrington which is one of the highest priced Chicago suburbs, yes it would be more difficult to find a nice home under $300k.

But there are LOTS of suburbs of Chicago where there are numerous non-shack houses for under $300k. Many of them are not very far from where you live now.

How "young" people do it is they buy a smaller house that is not in a top priced neighborhood, fix it up some, build some equity, save some more money and then they move up in a couple of years.

 

[Chicago526]

We were only able to because I got lucky. I bought a condo in 2001 that went up 50% in value in 4 years. The profit I made on it was just (barely!) enough for 20% down on a single family home that wasn't a total dump and fit our requirements (yard, basement, two story, 3 bed/2 full bath). We still had to move to an area with less than desireable schools. To get into the "good" school district, we wouldn't even been able to buy a small townhome. Even dumps in the good school districts are pulling in top dollar, people are buying them, tearing them down, and building new homes on the lots!!! Housing prices here aren't as bad as a lot of places, but it's still nuts. And the worst of it is that DH and I make REALLY good money!

The house itself needs work. Most of it is cosmetic, but almost everything needs to be redone, so it's not just a few weekend projects, it will take us YEARS to get this place up to 21st century "fashion" . The previous owner last decorated when Nixon was in office, I'll leave what that looks like to your imaginations.

 

[BeNJeNWaFFLe]

Not saying housing is not overpriced right now, but younger people seem different now then when I bought my first house 20 years ago. My nephews are constantly complaining how they can't afford to buy a house. They can however afford to buy $30K+ new cars for them and their wives. They have High Def. plasma TV's, go on vacation 2 times a year etc. etc. etc...

Oh I completely agree about your nephews. Reminds me of my neighbors. They have 3, yes 3, plasma tv's but they don't have curtains (not even sheets) on their bedroom windows. Very strange to me. But I know someone who dropped out of college because they "didn't" have the money for it. Thats all wonderful and understandable except then they "had" the money for a car. Um yeah ok. They spend extravagently. (They bought 2 $1000 watches.) They can't even get a credit card because of many loans in their name. Yes, they can't afford college but they can afford I believe it is 5 cars. Priorities are a little off IMO. Now they are going to take out another loan and buy themselves a new car.

They annoy me to no end with their horrible decisions. Would I love a new car? Sure! But my education came first. Could I really scrimp and save and buy a new car on a 5 year loan now? Yeah I can. But I would rather save my money for a house so I don't have to live with my parents until I am 40. With housing costs the way they are I'm going to finish paying off my school loans just in time to get a mortgage. I can't afford any of the houses around here. And trust me, I am not looking for a dream house. I am looking for a real run down fixer upper. Even those are running for like $300K. I love Long Island, my job is here, and I don't want to move. I just really hope the housing market realizes that the younger adults cannot afford it here.

 

[golfgal]

if you insist on staying in Barrington which is one of the highest priced Chicago suburbs, yes it would be more difficult to find a nice home under $300k.

But there are LOTS of suburbs of Chicago where there are numerous non-shack houses for under $300k. Many of them are not very far from where you live now.

How "young" people do it is they buy a smaller house that is not in a top priced neighborhood, fix it up some, build some equity, save some more money and then they move up in a couple of years.

I agree, young people today want to buy their "dream" home right away so they look at these huge houses and "oh, I can't afford a house". Try looking in other areas that may not be the in place to live and you will have more luck. In our town $300,000 would buy you a 4000 sq foot, 2 story, 4 bedroom house with all the amenities.

I guess for a "starter" home, why not look at the track housing, they sell easily and appreciate and a good rate. Plan to stay there about 3-5 years and you will build up some equity and be able to move into your dream house then.

 

[Crankyshank]

It's called a starter home.
Something that seems to be an alien concept for many young couples who think right off the top they should get a 4000 sq ft house with all of the trimmings in a hot market area. It's just not realistic.

I live right outside of (as in less than 10miles from downtown) one of the largest cities in the north east. I live an hour or less from 2 more in one of the most ridiculous housing market areas in the country. I bought a house for under $200k in a nice area just a couple miles from 2 major hwys 3yrs ago. What's my secret? We went with a 1200sq ft 1940 2BR/1BA Cape Cod that needed some minor work done. I did the same thing my parents, grandparents, and great grandparents did - bought small for our first house and eventually we will buy a bigger one as our financial situation improves and we acquire equity in our home.

 

[Chicago526]

Seriously, how do young couples afford to buy a house these days? In order to make decent money, most people need to be near a big city (at least in my husbands field). I do not know how we will afford to buy a house. We make good money, above that 5% mark some one mentioned on another thread, and I can't figure out how we will be able to buy a house. Everything in our area under 300K is either a shack or in a track subdivision were you need to count down from the beginning of the street just to figure out which house is yours. You share your backyard with four other homes, no trees. We are looking into moving in the next year, hopefully NC, someplace more affordable. We are lucky that DH salary doesn't change no matter where he is. We are hoping to start our family this year and I have decided if we waited until we buy a house we will be starting our family in 2010....

Just a vent... it's really difficult for couples nowadays. We will probably buy a condo in this area if we stay, can't afford a house.....

If you want to stay in the NW burbs, Elgin has many nice homes for the low $200,000's. I did a serch at ChicagoTribune.com for single family homes between $200,000 and $225,000 that have 3 bed/2 bath and I got 48 homes. Some of them were newer homes and some were 100 years old or more, so there is plenty to choose from. Many had be updated with new mechanicals and updated kitchens and baths.

NW bubs are very expensive, DH and I were where you are right now only last summer. We did find that the only area with homes in our price range were in Elgin, Schaumburg, Hoffman, even Streamwood were all too high, even for a townhome. Elgin's schools are not the best, but they have improved a great deal, from what I understand. And if you don't have kids yet, it won't matter for at least another 5 or 6 years, and by then you may be able to afford an area with better schools if you dont' feel comfortable in Elgin. That's our plan, see what the schools are like if/when we have school age kids and either move or send them to private if we dont' feel the public schools are up to snuff.

 

[Christine]

If you want to stay in the NW burbs, Elgin has many nice homes for the low $200,000's. I did a serch at ChicagoTribune.com for single family homes between $200,000 and $225,000 that have 3 bed/2 bath and I got 48 homes. Some of them were newer homes and some were 100 years old or more, so there is plenty to choose from. Many had be updated with new mechanicals and updated kitchens and baths.

NW bubs are very expensive, DH and I were where you are right now only last summer. We did find that the only area with homes in our price range were in Elgin, Schaumburg, Hoffman, even Streamwood were all too high, even for a townhome. Elgin's schools are not the best, but they have improved a great deal, from what I understand. And if you don't have kids yet, it won't matter for at least another 5 or 6 years, and by then you may be able to afford an area with better schools if you dont' feel comfortable in Elgin. That's our plan, see what the schools are like if/when we have school age kids and either move or send them to private if we dont' feel the public schools are up to snuff.

That's how it was when we bought our townhome in 1988. We were in Prince George's County (in Maryland) and it had THE WORST school system (still does) and not a great crime rate. Anyway, we were childless when we bought the house. When DD turned 3 1/2, we moved. Had enough equity at that point to get a nicer house in a better neighborhood, but a did have a longer commute. I'm now on my 2nd house (and I'm 42) and am STILL working to getting in my dream area. My house will probably be smaller but I will be closer to work and in an even better school district.

It just takes a lot of time--almost a lifetime to get where you want to be if you are just an average person.

 

[mickeysgal]

We went from apts., to cheap house, to another house, and now we are in the 300,000 house.
It is called house hopping. You take a gamble and buy, and hope you build equity and sell for a profit.

Of course I do not share your expensive zip code. You will get there one day & it will fall into place! Just have to keep yours eyes peeled, keep tabs on the market and have some luck.

Your zip code is one of the most expensive in the Chicagoland region. Not all regions are this pricey. If you want to stay in Chicago, may I suggest the south and southwest suburbs? They're generally a bit cheaper than the north and northwest suburbs.

When we started out, we found that we had to go farther outside of the metropolitian area to find cheaper housing. The farther out you go, the more affordable it should be. When we sold that house, we went out even further, into a newer developing town/region. We got in when the town was first developing and rode the ride up in housing prices there.

Housing prices are certainly sky-high. Some of the areas we've lived in have increased so much. Seriously, prices have increased so much that I really don't think we could be comfortable buying back our last home at it's current market value (if it was available) and eat at the same time.

Where do people get the money to furnish these homes given so much of their disposible income goes to mortgage and taxes?? Do they eat well??

 

[mom2rb]

We have been in our starter home for 6 years now. I paid off my car last month. DH's has been paid off for 3 years. I paid off one credit card yesterday and have 2 left, to be paid off in May and December. The DVC will be paid off next February. I have my house on a 15 year note so I can build alot of equity in a short time. Next March we start looking for the "dream house". We are lucky. We live in an area with affordable housing. But I still don't ever want to be "house poor".

 

[bananiem]

I agree with the posters that say people get out of college and expect a "perfect" home right away and the "in" car. Our parents had to work their way up to what they can now afford. Mine started with a 2 bedroom house then moved to a 3 bedroom when the 3rd kid was on the way. Wasn't huge, but we could afford vacations.
I also think it's naive to say "In order to make decent money, most people need to be near a big city (at least in my husbands field)." Yes, there are a few things that are only done in certain areas. But I don't think you have to live in an area the size of Chicago for most jobs. I think that you'll find you pay extra to live in a large metropolitan area vs. a town of 100,000-200,000.

 

[icebrat001]

As I Previously mentioned, SO and I are purchasing a home.

We are not looking for our dream home, but we want a home that is move in ready or close to move in ready, we are not handy AT ALL, if you knew how long it took to assemble an office chair you would understand. We aren't looking for a shack either, we just have certain requirements. I don't think anything is wrong that that.

Some people, both young and old are taking a huge risk by doing the no down or zero interest or other crazy loans. We are not risk takers at all. We are putting money down on our future place but we are also purchasing a place that will be in a nice area with good schools and a decent size so it will appeal to the buyer when we plan to get rid of it in 7 years and purchase something better.

I think some young people are stupid and don't research things, but t here are others that actually have a brain and take the risk into consideration and ask their realtor and people on the DIS a thousand questions.

 

[Crankyshank]

It's not a huge risk to do a 0 down loan if you know the area you're buying in and you know something about home repairs and what will give you a return on your investment and what won't.
We got our house 3yrs ago with 0 down (VA loan) and it's increased in value between $60,000-93,000 in that time depending on who is doing the assessing and the improvements (kitchen, bathroom, wiring, yard) will further increase our value in a market that might be cooling but won't be cold for a long time due to several reasons.

Would I pay 0 down on a house that needed less work and has less of a chance to build equity quickly? not a chance, but it's not fair to say people putting $0 down don't know what they're doing.