There was a thread about brick & morter stores closing, which lead to a thread about restaurant sales dropping. I did not want to hijack the restaurant thread, but there were a few comments in it about people with less descretionary income which got me thinking about something I've been trying to wrap my brain around for the last year or so. When I was a young man I wanted to buy a house as soon as possible. I always said "there is no value in a shoe box full of rent receipts".

Around my area (Kansas City) there seems to be a boom in apartment complex construction, much more so than new home construction. It seems a lot of people see no value in home ownership anymore. I am amazed at the number of new apartment buildings I see when I am out. Who are these people paying $1200+ per month for a two bedroom apartment?

Do you see the same thing where you live? Does anybody know what is driving it? Young professionals saddled with student loan debt cannot qualify for a mortgage, maybe?

the younguns ain't in no hurry to buy a house. schitty job market in a lot of areas is the main reason, no matter what anybody says. that and the fact that in a lot of places you can't buy a decent house for less than 300k. the american dream has changed while nobody was looking.

Home ownership is a pain in the ass. People are more mobile these days, it will take ten years or so on a 30 year note to build any appreciable equity. And fricking houses are HIGH. A $450k house is nothing extravagant in lots of places. Twenty percent down on that is $90k.

Most millenials see little value in home ownership.

And some of their reasoning makes sense.




Travis

The older I get, the less value I see in it.

Color you special.

Buying and selling homes has been nothing but good for me.




Dave

Yep, I'd rather just throw away all 30 years of payments to rent rather than buy... YMMV

I work in the south KC area and I think alot of the newer complexes are catering to the inner city crowd , that and replacing the ones that have burned down lately .

Well, I'm glad it has worked well for you.

You and Jeff0. Coincidence?

Many in my grandparents generation built their own homes. My parents generation owned their own homes. The generation after me will pay someone else for a place to live.

You think Jeff O has owned and profited from ownership?




Dave

Paying rent is just pissing money away

I can't see the reasoning to get a 30-year note. Did mine on 15 for not much more per month. Mine will be paid off this year.

When I started college, instead of throwing away money on rent, I found a house near the college in rough shape that no one had bought. I picked it up cheap. Lived in it while in college and then remodeled the whole thing before soon to be wife and I got married. Sold the house for $50k profit and put that money down on new house. That's the house that will be paid off in couple of months.

Current house is valued at twice what I paid for it. Yep, what a waste
Boys will start college in 3 years and I won't have mortgage or rent. Yep, complete waste.....

OP is right. Tons of apartment complexes going up in our area too. More than I can fathom.

I live north of the river. If you drive highway 152 west from Liberty to Zona Rosa you will see a ridiculous number of new, very nice looking apartment complexes.

I work downtown, and that's a whole 'nuther subject there. People are moving downtown as fast as developers can make space for them, it seems. At least the people buying condos will have some equity.

Bet you didn't have a $450k note either. Most people don't have the squeeze to do houses today on 15 year notes, which is one reason home ownership is decreasing.

But congrats on your sound financial sense.

Well it ain't no guarantee of a big payday someday like it used to be. Still, even with taxes and HO insurance rolled in, plus interest, my mortgage is less than renting even a small older home around here, assuming you can find one, and about on par with decent 2-bedroom apartments. Factor in the tax deductions and it gets better.

There's a lot of work and expense involved, of course, but a lot of benefits as well, including space for fruit trees and a big garden.

Years ago my wife and I thought about buying a house in Bozeman($$$). We really didn't even have any net worth or down payment at the time but they'll give you a loan!


My very conservative parents warned us bad idea.



Ended up moving back home and housing was cheap at the time.



Bakken crept in and homes doubled in price, ours might have tripled. Pure luck but we have the best location in town so resale will always be there.



Only downside is our property taxes have doubled.

30 year loan(3.375%) and we are on track to have it done in under 10 years. 3 more to go.




Find a deal and buy...

Expensive housing markets definitely drive people towards rentals. It's one thing to buy a home in a rural area, quite another if you live in areas with average home prices near or above $400,000.

Another thing is mobility. A lot of people change jobs a lot more often than they used to and it is a pain to buy and sell houses every two years.

The housing market in Kansas City is less expensive than a lot of places around the country, but I'm sure developers are always trying to push prices higher. I bought a forty year old starter home - 900 sq ft 2 BR true ranch with single garage on a crawl space - in 1992 for $41,000. In 2001 I moved across the street to a 1650 sq ft 3 BR, 2 bath true ranch with 2 car garage and full basement for $110,000. I started with a 20 year note on the current house and after 1 year I refinanced to a 15 year note. I paid additional principal and paid it off almost two years ago. I still have the first house and have it rented out.

I could sell my current house and "move up" but why? I'm a bachelor living in a house that was built for a family in 1963. I don't need more room, I don't need a bigger yard to mow, and I sure as hell don't need HOA dues to pay!
I drove through a subdivision about a mile from my house recently and saw a sign with an arrow: NEW HOMES FROM THE $300's. I just shook my head in disbelief.

When considering housing costs, one must consider;

Cost of housing you need,

VS

Cost of housing you think you need, to impress others

When one is married there is apt to be a difference of opinion as to how much house you "need".

Wimen's will keep a fella broke! 😀

The building boom around here are mostly rental complexes where they spoon feed you and change your Depends.
Having been involved in selling two houses recently, and in the process of selling a third, potential buyers don't seem to have down payment money. On both sold homes we increased the sale price and "contributed" the extra to the buyers for their down payment..... essentially folding their down payment into the mortgage. Seems like a scam to me but the realtors say it's about the only way they sell now days.

Good point, on its face, but often the areas where smaller home are available aren't places you really want to live.

I solved that by building in a new development out in a bedroom community where lots were decently large and reasonably priced, and the builder offered modest homes. I did a lot of driving for 20 years, but when I retired, I was already where I wanted to be, so no moving was required.

Paying any mortgage bi-weekly, 26 times per year, or making an extra monthly payment, 13 times per year, will reduce the length of the mortgage and the associated interest by a significant amount that shocks most people when they see the numbers and wonder why their mortgage holder didn't tell them about this "trick".

We have been seeing this for severel years. They have been building apartments as hard as they can go. Millennials and transplants really dig that kind of lifestyle. This lifestyle also lends itself to liberalism.

They don't have down payment money because they've been paying $1000 a month in a fancy apartment complex for the last eight years. 😀

Savage24,

I live just south of KC and have some experience in what you are talking about.

Yes
- there is a shortage of starter homes which drive small houses above 200k.
- Young people don't want a home, and they want some place that they can either entertain or someplace that is cool (lofty).
- Many of them can't qualify for a home loan of 230+K after they changed the bad loan rules.
So to get what they wan they have to move so far out away from the entertainment that they don't want it.

That means developers who have to build make bigger bucks building apartment complexes - so there you go.

The growing apt market may not reflect an unwillingness to buy. Millennials with chit jobs, heavy college debt, and health insurance payments can't afford mortgage payments, it takes 2 or more together to even have an apt. Doesn't pay to buy if you do not have job security. Look at all the stores closing most of those jobs are not high paying jobs.

It's amazing what some houses are valued at.

Owning a home isn't the investment it used to be, maybe not what it ever really was. Our home is paid for, my daughter and her husband are buying. My son is still renting, but working toward buying in a couple of years.

My parents built a new home in 1972, paid about $20K total for the home and lot. It sold in 2014 for $103K. Mom and dad paid off the mortgage in 10-15 years, but interest was sky high back then. Figure the interest, the property tax and insurance paid over 42 years. Plus the cost of new roof's, HVAC systems, painting, re-roofing, lawn care, new appliances, flooring, and other items I'm not sure they broke even.

We are also a much more mobile society today. Back about 8 years ago or so when the economy tanked there were thousands of people who had opportunities to take high paying jobs, but they had to relocate. They had homes they couldn't sell and were trapped into staying with a much lower paying job. Those who were renting could take advantage of those jobs because they were more mobile.

And there is a trend with the younger generation even among those who buy to buy much smaller homes. They truly are less interested in material things and a big home to show them off. Many kids today would rather invest their money somewhere other than real estate and spend money on experiences and travel rather than material things.

The trend is different, I'm not convinced it is necessarily worse.

I've heard that this practice of concealing the no down payment is not only a scam, but illegal in some places. Don't know, but it does seem like it is fooling the lender into thinking the purchaser has some skin in the game when he does not. This situation is what brought on the last crisis when house values dropped and the residents just walked out. I'd keep quiet about it at the very least.

That type of information is not hard to find In the Information Age, if people care to look. I was constantly surprised during the mortgage crisis by the number of people who blamed bankers and realtors for their poor financial decisions: "they told me I could afford this house on my income!"

Another big factor is job climate. IT industries, the average time on job is roughly 5 years. After that you may wind up thousand miles away starting over. In the ten years I've been out of college, I had jobs from 1-3 years in three different states, from south Dakota to Wyoming to tennessee, not counting travel to satellite office location on site. Assistance.

Gen-x and millennial are stuck in a market where the migration to another company is the only way to advance a career, which could mean migrating to any point in the world on weeks notice. Renting makes more sense when you don't know where next month's paycheck is coming from.

Three days of joining a company, setting down roots, and putting in your 45 years for a pension are gone.

There will always be people to live beyond thier means.

And those that are willing to risk other peoples money to make thier own.

- it's when the bankers mixed good debt with bad that people didn't know the risk of thier investments and everyone got screwed.

For much of my life Brick & Mortar has frustrated me with, "We don't have that in stock, but we can order it."

It turns out so can I.

Seems like over the past several years, often what available jobs that pay enough to even possibly consider buying a house, including some that require college degrees, are limited term contract jobs and/or through temp services with little if any benefits, and neither offering enough long term job security to confidently allow for major debt commitments.

I have made those calculations also and there is much truth to it.

Just off of a mortgage calculator:
300K mortgage 30year 4% with average Ins and average taxes 30 payout would be about $680k. And that's without the repairs, appliances, reroofing, etc.

And I don't know how realtors come up with the amounts that they say you qualify for. Most are totally unrealistic. I feel that taking the figure they say you qualify for and halving it is more realistic.

In today's job market you have to be mobile, ready to go where the job is, can't wait to see if house sells.

I'm sad for people living that lifestyle and raising children. I went from kindergarten thru high school in the same school district and lived in the same house from 1st grade thru HS. I attend class reunions because I know every one of those people and I've known many of them since grade school. I have a hometown. If someone asks me where I am from, I have an answer! I am sure there are positives to living in lots of places and meeting new people all the time, but I'm happy not knowing what they are.

I am aware that people who change jobs every 3-5 years are seen as "go getters" by management in a lot of fields these days. That is also foreign to me. I am a building engineer and in my work the longer you are in one place, the better you know it. I have been at my current job 6 years and work with a guy that has been there for over 30. He is a wealth of information and whenever he is off and there is a crisis, he is the first person management will call and ask 'how fast can you get here?"

When I was laid off in 2009 I went to work for a real [bleep] property management company. I was in charge of an 18 story and a 5 story office building. Most engineers last about 2 years there. I lasted 22 months. As a result of that high turnover rate, (and really bad upper management/ownership) the place is in complete disarray. The same old problems were being addressed by a new guy who had no knowledge of how guys before him had tried to rectify the situation. Equipment was valved off and out of service and no one knew why; some said it leaked, others said it was plugged up. Everyone agreed that it had not worked for years. Projects were abandoned half complete because the guy doing the work had left for a better job or been fired

I don't know how they come up with them, but I can tell you why they come up with them:
Realtors work on COMMISSION. Once they close the deal and get their money. It is not their concern whether you can pay for the house or not, that is between you and the mortgage company. It's the ol' "I'm not against you; I'm for me!" Attitude.

We moved from Texas to this God-forsaken state of Illinois in 1999. Took out a 30 year note on a house and placed a hefty down payment. The next year interest rates fell to 3.2% from the 4% we were paying. We refinanced and took out a 15 year mortgage. My wife succeeded in paying almost 20 double payments. We paid for our home 2 years ago. We paid for our vehicles almost 8 years ago. Having no house note or vehicle payments is sooooo nice. I'll drive my truck until it becomes too expensive to maintain. My wife will drive her Vibe forever. I save a little back for the downpayment I'll have in reserve for my next new vehicle...if I ever get another one. A truck equipped as mine is now runs around 60K. Sure can buy a lot more of the important stuff like guns, bullets, brass, powder and a Dillon XL 650 since we got rid of the pesky monthly payments.

Anchorage is teetering on the verge of a big recession, IMO&E, and I am looking at investing in a few properties in a few years. Screwed up by not buying some during the crash in the late '80s.

Almost bought a strip mall at Old Seward and Huffman for 500k in '88 and it would have been ridiculously good by now and paid more than its own way.

During that crash a bunch of big banks invested in this market and propped up the condo and starter house end of things a bit too much.

Not calculating all of the benefits of owning can make someone think it is a bad idea to own...

I hear the comments about selling 30 years later and maybe breaking even.

It doesn't take a genius to point out that the 30 year renter has nothing to sell to
"break even" after 30 years of handing money over.

Renting is literally paying the landlords mortgage.

Yup.

This wasn't always the case in the past because there was no way to find distributers and other dealers, but now the www makes that easy. Parts lists and DIY instructions are also available from mulltiple sources. It's not always just about price, but often time as well.

Being able to qualify and being able to afford it are two different things. I wouldnt let anyone tell me what I can afford, only I know that as only I know what I spend on other things other than my mortgage. Just because a Bank or mortgage company will fund you at 40% of your income doesnt mean you will be able to pay it if your going to spend big money on toys and vacations. They dont take into account where your going to get the money for a repair either. Use a realtor to show whats available in the area and for info on comps and leave it at that. Why anyone would take advise from a realtor ( and I am a commercial realtor) on their own personal finances is beyond me.

These days price of Real Estate is more cyclical and due to the job market people are more transient. Makes it difficult to commit to a mortage on a house if you dont know when you have to move you will be able to sell it and clear your mortgage.
My Grandfather graduated from high school got a job bought a house . He lived in the same town and worked at the same plant until he retired and eventually passed away. Makes good sense to buy if this is your expected situation.
Myself on the other hand graduated from college and moved 6 times the first 15 years. While now I am stable and own my own home these days I would have got smoked if I would have tried to own while I was coming up.
That Said I lived in cheap rentals and saved my money up for for a place of my own. I didnt have to go out and do a 80/20 mortgage for 30 years.

There's no mortgage on my rental property anymore. My renter is paying for my guns.😊
"I spent the rent money on a gun again." Is an ongoing joke with me.

My nice, but 5-year old Samsung flat screen had sound, but no picture. The local B&M wanted $100 to look just look at it - repair would be extra. I spent 20-minutes on the internet and learned to it was probably a component on the power supply board. The component was a few bucks, but I could buy a brand new board off eBay for $50. I rolled the dice and spent the $50.

When I opened the box I said, "Ah, so that's what a TV power supply looks like." I found the board that looked just like it in my TV and replaced it. The internet provided all the instructions.

The flippin' TV STILL didn't work. Just kidding, it works great.

And I'm sad for people stuck in the same job for 45 years or 4 generations of people never leaving a 5 mile radius.

Staying in one place from tit to grave ain't something that makes someone 'special'

Ditto RyanTx.

I preach two things to my kids.

1. You don't have to be rich to retire with wealth. You just need to start early and keep at it. Have a retirement age goal and work towards it.

2.NEVER get a 30 year mortgage. You can get any term you want. If fifteen isn't doable try a 20, but never a 30. A home is only worth its equity.

I am not in good shape for retirement. Inadequate retirement account, at a scary age with a tenuous job which if lost would likely cut my salary in half. No savings. (yes- I have a wife with some issues) Still have some years left on my mortgage which I refi'd from 30 to 15 years some time back. New homes cost twice they did when I bought mine.

I want my kids to be better prepared than I.

No question, the knife can cut both ways when it comes to the benefits of ownership.

One of my neighbors moved from a small town in New Mexico a few years ago. He had purchased a house on five acres for around $200,000 five years before. Just after he left, the real estate market tanked for some reason and he could not sell his house for four years. When he did, he sold it for $160,000. His payments were around $1,000 a month, so he paid $48,000 over the four years for a home he couldn't sell or live in, not to mention the loss.

One of my coworkers moved from Fallon, Nevada in the fall of 2008. When he went to sell his house, it appraised for $60,000 less than he paid for it two years before and $40,000 less than he owed on it. Nobody bought the house, and since he was a young guy with three kids, he couldn't pay the mortgage so the bank took it back. Ruined his credit and he is still renting 9 years later.

I own a lot of real estate myself, so I am not saying ownership is a bad thing, but like everything else, it does not work for everyone. Especially people in industries where you have to "Move to move up".

Even a 30 year mortgage is better than paying rent for 30 years

At 4% I'd take a 1000 year mortgage.

Owning has been good for me and I think it is still preferable for a young family looking to settle down. I do however think there's risk in buying a McMansion thinking you will flip it and make a fortune. There's good buys in older homes but kids don't want them they watch too much HGTV and can't live w/o the bells and whistles. I just sold my Moms house a 60 s vintage ranch . Sure it needed some updating but it was a well built house. And the improvements were all pretty much superficial and could be done while living in it. Kids today just can't see that. My Dad was offered 25% more for the house 20 years ago than we got this year . He didn't sell as at the time prices were higher , ranches were still in demand not so much now and there have been new subdivisions pop up since then.

Let us not forget either how many more adults are single or divorced nowadays. Under those circumstances folks are considerably less likely to commit to the degree of "settling down" a house implies.

Also, I've been a 30 year teacher, same school, ain't too many professions offer that sort of stability and longevity any more.

Our home was cheap and the modest note will be paid off in less than 5 years, where it is ain't ever gonna be worth much more than that tho. It wasn't bought as an investment in mind but mostly as a cheap place we could have dogs and a garden and such, for that it has worked well, and may generate a modest rental income for my son. Just gonna eventually hand it over to him anyway.

Birdwatcher