Yes, you can own a home
January 27th, 2008 | by mbhunter |Maybe not right now, maybe not right out of college, and maybe not in the middle of a big city. But you can own a home. Titling an article “Why you might never own a home” isn’t meant to be encouraging, and though it may be dire now for people looking to buy, it won’t be dire forever, and not everywhere.
Paying nearly $700,000 for a 1,000 square-foot 2 bedroom apartment in Manhattan is a ridiculous amount to pay for a dwelling, but living in a big city is expensive. Living close to a big city is expensive. People who do are paying for location, location, and location. And that’s fine if they can. Living around a big city will likely be expensive for quite some time in the future because you can’t move where the dirt is. And if you limit your search to areas around a big city, you’ll likely see a lot of properties that will be difficult, if not impossible, to afford.
Even away from a big city, overall housing has been expensive recently. It’s been very easy to get financing over the past few years, and with more bank-qualified buyers chasing what’s available with pre-qualification letters that let them borrow for lots of house, prices have gone up quite a bit. So, sure, this is a tough time to buy because of all of the stretching that’s necessary.
This isn’t forever, and certainly this isn’t forever everywhere. I’ve had a home for over six years, and I honestly would have a rougher time affording it now than back then. That, and when I did enter the market, I had a fairly decent salary, so there was little need to get risky financing. A 30-year fixed rate mortgage (at the time) was affordable. My experience isn’t much comfort for people entering homebuying mode right now, especially for people with an entry-level salary right out of college. (”Yeah, great for you mbhunter, but you’re already in your house!”) I was fortunate that the timing was good when, and where, I was looking to buy, and I imagine it can be frustrating not to have the moons aligned.
If you want a house and the time and place isn’t right, then make a plan which might involve choosing a different time and possibly a different place to buy a home. This isn’t the kind of advice people want to hear, but this seems far better than (a) feeling paralyzed that home ownership will never happen or (b) feeling such a sense of urgency to buy for fear of not being to own one that the purchase is too expensive. There are certainly other things to consider, and it would be naive for me to think that just picking up and moving to a less expensive city would work for everyone. But on the other issue, the way things are going, I think time will be on the side of the buyer for a while, so having to wait to buy a house right now is a blessing in disguise.
4 Responses to “Yes, you can own a home”
By Dollarfrugal on Jan 27, 2008 | Reply
Of course, it’s more difficult now, but it’s far from impossible! This article is so horrible, I don’t know what to say. I read it yesterday, too, and shook my head the whole time. Your advice is sound; a different area (not so expensive) is definitely the way to go.
By JB on Jan 27, 2008 | Reply
I didn’t even read the housing article, the title was horrible. As a 25 year old college graduate, it feels dismal at times but I know it will happen. And even if it doesn’t there are a lot worse things than not being able to own a home.
People are always saying move to some rural area where home prices are 2/3rds of NY, SF or LA. But there are other factors at play. I make more money in an expensive city than I could somewhere else, my family is here and everything I’ve ever known. The intagible is often far difficult to deal with than the tangible, IMHO.
By Jane on Jan 28, 2008 | Reply
I don’t know about San Fran. But NYC is much large and more affordable than this article portrays. I don’t live in Manhattan but I do live in Queens with Mass Transit options that can have me in the City for easily less than 45 minutes. I have a 2 bedroom for less than $250,000. It’s all about trade offs.