So, the wife and I are finally done with our schooling, our grad schooling and everything else. We finally have real jobs, making real paychecks, and are productive members of society. Next step: Buy a house. Right?
We tried that. Despite the fact that our combined incomes are quite nice (luckily I have no male issues with my wife earning considerably more than me!), we find ourselves in a position of not being able to buy a place. We’re moving to the SF bay area, and have been looking for a nice one bedroom or smaller two bedroom starter home. Such places are LISTED at 700K, and actually tend to sell for a bit higher! Now, we could probably qualify for one of these mortgages that would allow us to afford it, but when we found ourselves considering paying such remarkable sums of money for a place we didn’t even like we decided to rent for a year and see what happens.
Oh, yeah. I keep becoming more and more successful in life, and the housing market keeps out-pacing me. Earlier this year, I looked into buying the house I’ve rented for six years now, and the payments would be roughly three times the rent. If only I could have bought it when I first moved in, but I was newly divorced and struggling with two part time jobs.
So I’ve just had to decide to keep renting. At least that leaves me with enough free income to have the rest of my lifestyle match up to where I want it. I just can’t have a house.
I live in a small town- about 70,000 people. I make a very decent wage, relatively speaking; a damn sight more than most of the people who live here. But I can’t afford a house.
The housing market is skyrocketing here- because this town has become known as a California retiree’s mecca. People like to retire here, and find that after selling their houses in, say, California, they can move here and be rich… and so they buy up lots and lots of houses, so they can rent them out. I met one woman who moved here from LA and immediately bought ten (!) houses.
As a result, renting is cheap… but buying is expensive. I’ve lived here for a year now- my landlord told me that the house we’re living in has increased over $100K in just the time I’ve been renting.
I have to move out on April 1st. I REALLY don’t want to have to move into another rental house… but I just can’t afford to buy a house of my own. And, like I said, I make an above-average salary- how the hell is the average joe supposed to have a chance of buying a house?
Well, there’s a two-bedroom across the street from me for sale in Hayward. They are, IIRC, asking $490K. It’s small and could use a little work, but has come a long way from the condition it was prior to the current owners.
You sound just like us, only my hubby makes a little more than I do. We’ve got money saved. We’ve got the kid’s school money all wrapped up. We live in NYC.
Nope, no way I’m gonna pay $800,000 for a 3 bedroom and 2 bath not-even-semi-detatched, clapboard eyesore in a bad neighborhood. But I keep hearing this bubble’s gonna burst.
There was a great article in The Economist about this a few months ago.
Basically, it argued that the wisdom that it’s always better to buy a house rather than rent is outmoded and inaccurate, especially given the current housing bubble. Compare for your own situations, but if you have the discipline to basically put the difference between renting and a mortgage into savings, you can come out way ahead in twenty to thirty years compared to those who insist upon buying a house and going through with a mortgage.
So, perhaps you shouldn’t worry about your situation too much. Keep renting, sock away and invest whatever you can that would normally go into a mortgage, and hopefully you’ll then have money to buy a house outright or come close once this housing bubble comes back to earth.
Everytime I think about moving out of Ohio, I just look at the housing prices and problems elsewhere and am glad to stay put. Not that I personally make enough to own a house, not by myself, but at least our prices seem reasonable, and every young couple or single professional I know seems to be buying. When my brother was thinking of selling his place (four bedrooms, 2-1/2 baths, full basement, huge yard, great quiet neighborhood near schools and shopping, in the suburbs but just minutes from downtown and major hospitals) they were asking about $225,000 IIRC. Come to Cleveland! We need you here!
Houses around the Detroit Burbs run about $175 to 350 (and up from there.)
My general neighborhood is about $250-325k.
Michigan needs more people. The weather sucks. Their is zero public transporation ( da buses only run from Detroit to mid-burbs.) and our roads are in a constant state of crap.
At some point I think its better to rent. I got out of my apartment and bought a house outside Philly that took me from $750 rent to $800 (incl. T&I) to own. I gained a basement but lost a bathroom. The value of my house, judging from the neighbors sales is about 75% more than what I paid. That gets you to a payment of about $1500 while the apartment is still about $800.
I can’t imagine that the pride of ownership is worth double the cost rent. The mortgage interest deduction doesn’t cover all of that. I wish I could sell my place and move back to an apartment. But then capital gains tax eats up a lot of the profit.
Everybody thinks I’m nuts, but I’m with you. Crappy 1BR condos in my area (Lincoln Park/Lakeview chicago) are $300K minimuim, which is something like $1700 a month. Screw that. In order to match my current rent, I’d have to find something for around $150K, which is hard to imagine.
I’m with you, Fiveyearlurker. I’m going to chill on this bubble for awhile, I think.
Not a homeowner yet. But–this is for me, personally–I don’t see anything wrong with staying in an apartment for most of your life. If you don’t want to, or can’t afford to, buy a house, so what? It’s a nice apartment, the rent is good, the super’s reasonable, stick around a while. No hassles with the mortgage, nada.
Of course, my viewpoint may change in five or ten years–who knows?
There are a lot of good things about apartment renting. Such as, anything ANYTHING at all goes wrong and it’s neither your problem, nor your dime, and it gets fixed right away.
I’ve owned before (am currently getting back on my feet, long story), and it’s all about making do, or doing without when it comes to home repair and maintenance, not to mention furnishings and all.
In an apartment, snow removal, garbage, water…everything is paid for, and IMHO, much more inexpensively than if you were a homeowner paying the ridiculous mortgage PLUS all of the extras.
I’m waiting til things get more reasonable myself.
Well, if the housing market is reasonable, then the 2000 a month (in this area) can go toward a mortgage where you are actually working toward owning something that you can sell down the line. When renting, you hand over 2000 a month, and after that month, you really have nothing to show for it.
Of course, now, while the rent is 2000 and the mortgage is 4000, it doesn’t make any sense to buy though!