Why I, as a Milennial, will NEVER be buying a House

"In the first quarter of 2014, homeownership for Americans 35 and under declined to 36.2 percent, down from 36.8 percent in 2013 and the lowest on record since the census's Housing Vacancy Survey began tabulating homeownership by age in 1982. Homeownership for all ages dropped to 64.8 percent, the lowest level since 1995, a report this week showed.

Mortgage rates are at historical lows, yet rising home prices and tightened mortgage standards, combined with still-challenging state of employment and the fact that millennials are paying off huge amounts of student debt, have discouraged many young Americans that otherwise would be buying homes, according to Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C.

The labor market for younger people remains pretty bad. Obviously you’re worse off without a college degree, but for people with college degrees, if they have a regular job, often it’s not paying very well and often they are jobs that pay just as well for people who have just a high school degree,” he said. “They also have a lot of debt. So it’s not surprising that people in their late 20s or early 30s are less likely to buy a home than what might have been the case 20 or 30 years ago.

Recent job market statistics underscore the tough prospects for young Americans. The unemployment rate of those ages 20-24 was 12.4 percent as of March 2014, according to data from the Bureau of Labor Statistics, compared with a current national average unemployment rate of 6.7 percent. For Americans 25-34 years old, the unemployment rate was 7 percent."

[link to www.usnews.com (secure)]

Why do you assume it will be worth more than when you bought it. Unless you're very smart and know the ins and outs of real estate, you're just gambling.

Say, for example, you purchase a house for $200,000, and 10 years later you sell it for $300,000.

If the house cost you $1,000 per month for principal, interest, taxes, and insurance (PITI), plus $300 per month for utilities, you will have spent $15,600 per year, or $156,000 for the decade that you lived in the house.

If you spent another $3,000 per year on routine repairs and maintenance, you will spend another $30,000. And if you did some of the more major repairs, like replacing the roof and flooring, and remodeling the kitchen and bathrooms, you probably easily sunk another $50,000 in during the decade.

That’s a total of $236,000 over a 10 year period, to get a $100,000 gain on the sale.

While it is certainly nice to walk away from the house with $100,000 more than you paid for it, the math doesn’t support the idea of the house as a winning investment. And we haven’t even accounted for transaction expenses (like the 6 percent realtor commission), inflation, or for the fact that the value of the house may not rise that dramatically over the next 10 years.

Over 100 years, average U.S. real estate values gained less than 1 percent, when adjusted for inflation.

Assuming a home’s value increased only at the rate of inflation, a property purchased in 1970 for $100,000  would be worth $625,873 today, a 526 percent increase.


[link to www.moneyunder30.com (secure)]

There are some issues that I see with that statement.

If I were a lender I may not give loans out either to people with student loan debt, as it could be a high-risk loan. I would not blame the banks in this case. I would blame the social standards placed upon young people by taking out student loans with no ability to repay.

Then in many cases people are buying houses that are more than they need and spending more than they should. But it typically ends up being a keeping up with the Jones' sort of thing. In a nutshell people have champagne tastes with a beer budget.

You're paying all that through your rent, not building equity and the landlord is making a profit off the deal.

Funny you should post that. A home purchased for $35K at that time is worth 520K today. This is the suburbs of NYC.

I defer to Martin Armstrong on this one:

"Never put a majority of your money into an asset you cannot move."

Not in Europe..you must secure the loan with another asset and the loan won't cover more than 60% - 70% of the value of the new house.

Young people cannot even contract debt outside probably some crefit card scam with 20% interest.

And another thread (one I never bookmarked) it was saying how west coast real estate is dependent on foreign investors who buy them and leave them empty.

There's lots of moving parts to this debacle.

Because after you buy, section 8 or fair housing kicks in next door, dark filth moves in, you lose your azz because the neighborhood is destroyed and the schools are ruined!

Stay away from the ghetto.

When you do the math on home ownership, it's plain that it is one of the worst investments you can make. Consider the purchase of a $350,000 house, which is slightly over the current average U.S. sales price.

In most cases, you will be required to have a 20 percent down payment, or $70,000. This leaves you with a loan balance of $280,000, which at the current interest rate of 4.5 percent for a 30-year fixed mortgage will give you a monthly payment of $1,853.10.

At the end of that mortgage, you will have paid $667,166 in principal and interest –- or $387,116 more than the original loan amount. During that same period, assuming a 1.5 percent rate, you will also have to pay another $126,000 in property taxes. (And there are plenty of places where the tax rate is higher.)

But wait, there's more. Using a 1 percent maintenance rate -- for upkeep, maintenance, and repairs -- you can add another $3,500 per year in costs, bringing the total out-of-pocket costs over 30-years to $898,166.

Buy an RV and travel. Buy a very small piece of land or two somewhere if you ever need to take a break. Been considering this myself. There's some aamzing RVs now days lol.

Last Edited by Loops on 05/18/2017 03:12 PM

What you are forgetting is, you actually live in the house.

If you are renting, you are still paying rent and utilities, even if they are included...landlords are not in the business of loosing money. They are making a profit off of you and you are a slave to their whims. They can evict you at the end of your lease, even if you want to stay. They can raise your rent whenever your lease is up. A little hit, that is why at the end of a year lease they roll you over to month to month...so they can raise your rent whenever they want.

So if you rent, at the end of ten years you have spent that same amount of money and have nothing to show for it.

As for regular maintenance, again that is figured into your rent, but nobody spends that kind of money a year....unless you are rich and have gardeners and maids and stuff like that.

Regular maintenance for us, is having the bug guy come and spray around the house...$97 every 3 months. Having the heater maintained...part of a service plan that I pay $180 a year for. Having the fireplace cleaned every 2 years...120.

Again all that kind of stuff would be figured into your rent.

I am not trying to change your mind, it frustrates me that young people are so miss-informed.

A lot of the problems with the housing market are based off of bad choices. People buying more house than they can afford. Listening to the bank on how much of a payment you can afford. Taking a higher interest
rate than you should.

What will you do when you are too old to work, and you don't have any assets to sell off. How will you feed yourself when your retirement money runs out before you die, if you don't have any tangible assets to unload.

Which is why you do not do a 30 year loan. The 30 year loans are a rip-off and why you must avoid them. Thirty year loans for homes is a relatively new concept that did not always exist.

But to make things "fair and easier for everybody" in this kinder gentler society it was implemented to give people the feeling that they are accomplishing something.

Run your numbers again, except on a 15 year loan and then you can see the difference.

Last Edited by BrokenTech on 05/18/2017 03:18 PM

You are absolutely correct. I didn't know this when we bought our first house. That's why I started making double principal payments. You save so much money on interest if you opt for the higher principal payment.

Then, if there's some kind of disaster against the building, the owners have to eat the cost to fix the building and/or fight with their insurance company to get their claim taken care of, while the renters just pack their things and move to another place. Or if property taxes rocket north as they often do, renters can just leave to avoid the higher fees being passed along to them, while property owners are left holding the bag.


The main reason I haven't bought is because I keep moving. I enjoy living in different cities for a few years at a time.

You can do a 30 year loan to take advantage of the overall lower payment in case you run into some difficulty along the way. But, if you go into it with the intention and ability of paying it off in 15 years is where it will make the difference.

Okay OP...IF you ever move to my resort area and need a place to live ( almost nothing not already rented) I may rent you my paid for home...

IF you have great credit, IF you have a great job, IF you pass a background check, and IF you have great past rental history and only IF you have no pets and do not smoke.

IF you rent my house you would be paying the mortgage on my 2nd home that allows me to live almost free.

Im so glad I have lots of Millennials to choose on the rare occasion my rental home becomes vacate.

With an outlook and folks like you I can all but name my price...well... the rental market is so good I do name my price!

Lots of folks lost homes to foreclosure in the past 10 years, markets do change but so many people standing in line to rent now, my area anyway.

And the stupid continues, paying rent you never get anything back plus if you go to a good bank you'll probably pay less than what you would for rent, then double up on payments and make sure you you tell them the second payment is to go straight on the principle not interest, you'll pay it off in half the time and way cheaper do to the lower principal meaning lower interest calculated monthly.

15 years and now you own a house that if you planned right by buying in a place where people want to live, it's probably worth more than you paid for it == profit!!

you have it all wrong, my friend. but go ahead and do it your way, if you wish.

Idiot ass.
My mortgage is probably the same as your rent. Difference is, when I sell my house or decide to move I get money back.

Don't blame the boomers, you make are generation look like even bigger fuck heads. Every generation inherits problems, how we over come them is what defines us. All you are doing is pissing and moaning.

Home ownership is heavily marketed for a reason. They want Americans to be in debt. It isnt worth it, especially if you dont have children or a family. The taxes on my house have increased so much to where I have no choice but to sell by the end of this year. I bought my house for $265,000. I put down 4%. My monthly payments, last year, were $2000. This year its $2500. And thats not even including the other ridiculously high fees I have to pay.

Do not buy. It is a scam. I was coerced by family members to buy a house and "build equity" but it has done nothing but damage my finances. It's not worth it. I've paid thousands in interest. I'm putting my house on the market by the end of this summer and I will be renting a house for $1550 a month. I'm never doing this again.

what is the current market value of your home?

That's your own fault for buying a house that was outside your means.

Also, buy putting so little down you had to pay PMI.

You probably bought more house than you need and through ignorance you did not research the taxes and fees. And you probably did a 30 year loan also.

That's actually a really good reason not to buy. We did that for 20 years. My husband was in the military and we moved every 2-3 years. So we always rented.

As for a disaster, that is what insurance is for. You have to make sure you are insured for the proper things. We have never had any problems with our insurance company and we have had to make 2 different claims...but I hear the horror stories. I think they are not the norm but the exception.

In the grand scheme of things, by the numbers a disaster on a home is relatively low. There are better odds of totaling your car than your house burning down, tornado, hurricane, earthquake etc.

There's no better investment than real estate...if you know what you're doing.

If you DON'T know what you're doing, you become the OP.

Why is this even being debated? Some are more suited to rent. Some are more suited to own.

Apples and oranges people.