Are Millennials making a mistake ?? (feedback, 2014, investment, mortgages)
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Oh goodie, a boomer wondering why on earth millennials don't just go buy a house. It could be that we have massive student debt because the cost of education skyrocketed, we graduated in a horrible economy (thanks for that, boomers), the cost of living has increased, and we can't afford a 20% down payment.
Sorry, this is a pet peeve of mine--people who think millennials aren't buying things because we don't want to. Sure, some don't want to, but largely we just can't afford it. I pay the equivalent of a mortgage every month in student loans. We will buy homes (and cars, and whatever else economists want to complain we're not buying now) once we can get the money together. It's just going to be about a decade past the age when our parents bought homes because, as a generation, our economic situation is radically different than our parent's. Unless you'd like to give us some money from your pensions or social security (which we also won't have) for a down payment?
Edit: I thought some numbers might help, because I have realized in talking to the older generations that they don't really realize just how much more expensive our education was compared to their's. I dug up the old UNC tuition numbers. In 1985, the oldest number I could find, tuition and fees for an in-state student was $794. Plugging this in to the CPI inflation calculator says this is the equivalent to $1,797 in 2017 dollars. Today, tuition and fees for an in-state student at UNC is $8,834. That's just tuition and fees, not counting housing and books, etc.
Last edited by georgiacat; 04-05-2017 at 07:39 PM..
Hey guys, I am not criticizing anyone here. I am a Baby Boomer with kids, grand kids, and just recently GREAT grand-kids. I guess my question/concern was the somewhat recent trend to forgo buying homes as a lifelong investment. My baby-boomer experience was just the opposite and wondered what people were thinking today. Perhaps that is not the the way to go today .... just worry about the decisions being made today and looking for insight.
I can't wait till people stop talking about my generation and turn their attention to the next one (so I can join the blame game haha)
But I'm a 25 year old homeowner, who likes the urban environment, and has no plans to get married or have kids anytime soon so I guess I'm a little mix of both sides
I do know for my friends that student loan debt is definitely a factor as well as the fact that nobody works 40 years in the same job anymore - people switch jobs every few years or so that may require moving while homeownership requires commitment to a location for a certain period of time. Renting provides some flexibility there.
Pitroad, how much have you spent on home improvements over the years? Ever had to put on a new roof, or new deck? New water heater? Remodeled a kitchen or bath? Those are things renters don't pay for. Subtract whatever you've spent there in your equations.
We have been fortunate that we bought our house 20 yrs ago before the housing bubble, and live in an area where home prices pretty much only appreciate (Chapel Hill) but folks who bought 10 years ago in other areas might be wishing they had rented instead.
Pitroad, how much have you spent on home improvements over the years? Ever had to put on a new roof, or new deck? New water heater? Remodeled a kitchen or bath? Those are things renters don't pay for. Subtract whatever you've spent there in your equations.
Renters generally aren't getting new kitchens and baths, so they don't get the satisfaction and enjoyment of such things. There has to be monetary value to that.
Pitroad, how much have you spent on home improvements over the years? Ever had to put on a new roof, or new deck? New water heater? Remodeled a kitchen or bath? Those are things renters don't pay for. Subtract whatever you've spent there in your equations.
I have done all those things and more over many years of home ownership. And yes there was costs to do each of these repairs/remodels but the cost compared to the several hundred thousand dollar equity was minimal.
We have been fortunate that we bought our house 20 yrs ago before the housing bubble, and live in an area where home prices pretty much only appreciate (Chapel Hill) but folks who bought 10 years ago in other areas might be wishing they had rented instead.
I think this is another reason....millenials have seen some crazy stuff happen with the housing market during their formative years...maybe they've even been through their parents' foreclosure. These things have impacts. My dad grew up constantly getting evicted from apartments in NYC because they couldn't make rent. Guess who harped on the value of homeownership to all his kids, all the time? AND paying the house off and not using it as an ATM? Sometimes it's all about perspective.
In 1985, the oldest number I could find, tuition and fees for an in-state student was $794. Plugging this in to the CPI inflation calculator says this is the equivalent to $1,797 in 2017 dollars. Today, tuition and fees for an in-state student at UNC is $8,834. That's just tuition and fees, not counting housing and books, etc.
Renters generally aren't getting new kitchens and baths, so they don't get the satisfaction and enjoyment of such things. There has to be monetary value to that.
They are if they move to a new apartment with new kitchens and baths. Renters can move much more easily than homeowners if they get tired of their kitchen cabinets or their neighbors. If you're talking about the millennials that are moving into all the luxury apartments being built all over Raleigh, Durham and Chapel Hill, they've probably got some pretty swank kitchens and baths.
I have just always heard (from financial advisors) that houses are really not good investments. Buy it because you want it, but don't expect to make big bucks off it. Likewise remodel the kitchen if you want to, but don't expect to get your money back out of it.
We're like you, pitroad, and going by the tax valuation our home has appreciated more than 100K, but we have put two new roofs on, a new deck, hardwood floors, converted a carport into a garage, remodeled the kitchen, put two new fences over the years around the big backyard (got a new dog that was a jumper and had to upgrade), and desperately need to remodel the basement. That would probably eat up most of that 100K+ that the house and lot have appreciated.
I like owning a home, though, and wouldn't want to go back to renting, at least not right now, but I don't think of it as an investment any more than owning a car is an investment.
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