Millennials Want to Buy Homes but Aren’t Saving for Down Payments | Hacker News Reader

Millennials Want to Buy Homes but Aren’t Saving for Down Payments

wsj.com

10 pointsspking26 comments

I have enough saved for a full 20% down payment, but I still can't afford a home in this area because the mortgage would go above the recommended 30% of my income.

But apparently that's still my fault, because Millennials Deserve Their Suffering.

You probably eat avocado too, you extravagant spendthrift you.

For first time purchases, there's the FHA program.

Also, it maybe cheaper to rent than to buy.

Or move to a more affordable area with a much shorter commute. Some people commute for hours just to say they own a home while they spend much more of their lives and more money driving for hours.

Next, some people just say "fuck it," buy a Sprinter or GMC Savannah and convert it to a commute vehicle / stealth RV. No rent, no mortgage and not piling on more debt to be a servant to for the next 15 to 30 years.

Inflation is the friend of the debtor, deflation and hyperinflation are the enemies.

Also consider property taxes of the future: they may greatly increase depending on political and economic conditions, especially if a "Greece" national, state, county or city debt default situation comes to pass, or expenditures like another large war occurs.

Finally, if a local housing market changes significantly it is possible to go underwater, even without climate change. In which case, people get trapped and may lose their homes. There are also legal, quasilegal and extralegal foreclosure risks which can wipe away equity.

https://www.trulia.com/rent_vs_buy/

https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...

30% is what's recommended. find another lender who allows DTI ratios up to 40%.

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Ambiguous use of 'cannot' versus 'are not' all over this article.

This. As a millennial buried in student debt I can hardly afford to put any money aside for a emergency fund, let alone a down payment on a house. Unless I get a major pay bump or cost of living reduction, I'm currently on track to pay almost 200% of my initial borrowed amount. All that money that could have gone towards a down payment will instead go towards a degree that I was told was necessary to "make a living".

So my options are either find someone willing to loan me the down payment amount at an insane interest rate, or continue to throw money into the trash by paying rent.

Trust me, home ownership isn't much better than throwing money at rent (depending on the market of course). Property taxes, insurance, maintenance, plus interest and PMI all dominate your monthly housing expenses -- the few drops that go into principle don't amount to hardly anything for the first 10 years or so.

In my case, the numbers looked good in the beginning. But then insurance went up 5x, property tax more than doubled, and the market tanked. Took a long time to get out of that situation.

My wife and I are about to close on a starter home in the NYC area. We put down 20%. We're in our mid 20s.

We have a circle of friends all about the same age as us, all coming from the same SES origin as us (low-to-mid middle class), who complain non-stop about how they can't afford a house in our neighborhood.

My wife and I both started college at 18, and graduated in 2-3 years (CS for me, BSN for her). We worked the whole time we were in college, and ever since graduating. She's currently getting her NP, and I'm still paying off loans from graduate school.

Of our friends, only one has a professional job (RN). Only one other graduated college (financial analysis), but chooses to work as a nanny a few hours a day so that she can have time to herself. The rest are employed in low level jobs, and have no college degree (no intention to get one, or still trying to "figure out what degree they want").

¯\_(ツ)_/¯

I'm not sure if it's supposed to be a humblebrag or an example of survivorship bias, or both, but thank you for sharing the experience with us.

It was my nice way of saying that in my experience millenials tend to make it difficult for themselves to succeed financially, and then question why they don't have more money.

I tried gently broaching the topic with my friends once. One friend who is a low level customer service rep that never attended college responded "I have a job, you have a job. We work the same amount [we don't]. Why are you able to afford to buy a house, and I can't?"

This is one of those areas I think both sides have a point. In many areas housing is incredibly and unsustainably expensive and that has to change. On the other hand you're right that many in our generation have absolutely no concept of saving, many of those wouldn't have been able to buy a house in any era and many didn't. And it does seem to be people with iPhones that fall into this category, it's rarely just the iPhone, it's the type of person that will buy premium brands for everything.

There's also a third branch, many that need a reality check on their expectations. They need to get used to living in a small apartment because they should never expect to be able to afford a large house close to a major city.

I work with customer service reps on a daily basis. Their work ethic is vastly different depending on the person.

Some customer service reps should be able to afford a house, while others probably shouldn't.

> I tried gently broaching the topic with my friends once. One friend who is a low level customer service rep that never attended college responded "I have a job, you have a job. We work the same amount [we don't]. Why are you able to afford to buy a house, and I can't?"

And what insights did you garner from that interaction aside from your thinly veiled sense of superiority?

You can be the best customer service rep in the world. It's not gonna make you enough to buy a house in my neighborhood no matter how much you wish for equality (unless you adopt a rather extreme saving lifestyle, which my friend has not).

It's facts, not superiority.

He works 8 hours a day and sometimes complains that a customer cursed at him.

I work 12 hour days (and I'm on call the other 12 when I'm not sleeping) 6 days a week. I go to sleep and wake up thinking about my work. Am I a workaholic? Yes. Do I love my job? Yes.

My takeaway was that most people don't realize that a typical 9-5 low level job is no longer gonna cut it if you want to live a certain lifestyle.

I don't consider myself superior to my friends; I just made better choices than them.

The customer service rep, for example, had every opportunity to go to college. His reasoning for not going was (and I quote), "I don't need to go to college to learn some nerdy shiz. Let's talk in 10 years when I'm managing a customer service floor, and you're talking geek to a computer."

We're closing in on 10 years now. I'm not gonna remind him.

> My takeaway was that most people don't realize that a typical 9-5 low level job is no longer gonna cut it if you want to live a certain lifestyle.

Being able to afford housing with a 9-5 job is a luxury now?

> I work 12 hour days (and I'm on call the other 12 when I'm not sleeping) 6 days a week. I go to sleep and wake up thinking about my work. Am I a workaholic? Yes. Do I love my job? Yes.

What's the point of writing that on the internet? Do you believe policy should be structured around people like you? Do you believe people who don't work 12 hours shouldn't be able to afford to buy a house?

> I don't consider myself superior to my friends; I just made better choices than them.

Yes, you do. It's in everything you write. You were able to make better choices because your circumstances allowed it. If you were their actual friend you'd probably have half a clue why they didn't make the exact choices you did.

> We're closing in on 10 years now. I'm not gonna remind him.

You're just being an asshole on the internet now. Everyone needs an outlet, I guess.

What you seem to be missing in every single response you've given is that I'm referring to buying a house in the NYC area.

As the article says, they can move to where a house costs $120,000. But they insist on wanting to live in NYC.

With my NYC salary and ALSO saving for down payment I obviously still can't afford to own any NYC real estate.

I have friends who do own houses out in suburban and rural areas. While it is expensive for them, because they do not have NYC salaries, I could afford their homes quite easily. Their monthly payments are often a fraction of my rent.

The problem is that if I move out to the sticks, my salary will also go way way down.

If anyone knows how I can make NYC money and not live in NYC, let me know.

Actually, never mind. I would rather keep paying rent and not owning than live outside NYC. What do I care anyway if I pay monthly rent or monthly mortage payments? I have food, shelter, and everything else. Who cares that I don't technically own the place I live in?

This is obviously a regional phenomena.

In the bay area, a small starter home is $2 million.

In Seattle, a small starter home in a half-decent area is $700,000

In Portland, a small starter home in a half-decent area is $500,000

The price to income ratio is way off in any half-desirable west coast city or suburb, whether you save for the downpayment or not doesn't matter if the average income won't support the payment. It's also going to take quite some time for most people to save for a down payment at those house prices, unless they get a boost from options, RSUs, maybe the Bank of Rich Mom & Dad, etc.

Meanwhile in Greenbay Wisconsin or any other midwestern city, starter homes are $120,000 or so. Go to the south, and the costs are even less.

> In the bay area, a small starter home is $2 million.

wrong. I live in the BA and you can get a reasonably nice 3/2 for between 600-800. Not in SF proper, but just a bit North, still in the BA. And if you go a bit further out to Vallejo or Fairfield, you can get a house for 400-500. Totally doable.

Also, I bought my first home in 2005 way outside the BA in Tahoe because it was all I could afford, but I still ownd it and got all the tax benefits. I could also rent it out, save more money and trade up later.

You just have to work a bit smarter and harder, and stop complaining.

You commuted from Tahoe to the bay area?

> And if you go a bit further out to Vallejo or Fairfield

Do you consider a 130 mile roundtrip commute reasonable?

Anyway, it's nice to know you can live in the extended region for much less than Seattle or Portland, both of which are totally overpriced and overrated with terrible weather.

No, I only owned property in Tahoe, and continued to rent my primary residence. My point is that I was a "homeowner".

Not sure where you are commuting to, but from Vallejo to SF is only 30 miles, and yes, I did it. If you are on the peninsula I would not consider Vallejo, but then there are other places further South that are probably also similarly priced.

> In Seattle, a small starter home in a half-decent area is $700,000

I closed on a house 6 months ago on a $375K house in Seattle. New townhouse, with direct access to downtown in 30 minutes. The deals are out there, just have to look for them.

My government just says I need to get a better paying job.

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