Almost 70% of Millennials Regret Buying Their Homes
cnbc.com
cnbc.com
[1] https://www.citylab.com/life/2018/06/millennials-are-happies...
Also, I can get a cheap place in the country with the deposit I saved up for a house in the city and not have a mortgage, OR I can take on a mortgage, live city centre, and have better access to employment in the event my remote job disappears, but taking on a mortgage and still being a crappy commute away from potential <other job> is not a pleasant thought.
Edit: Should mention that the specific circumstances I referred to are: * work 100% remote
* happen to be looking at a house near a train station 90 minutes from the city (in many US cities this would _be_ a suburb)
* Interested in intensively cultivating an acre or so of land to be a bit more self reliant w.r.t food.
- City center
- Neighborhood
- Suburb
- Country
At least that's the case here in Portland. My preference is Neighborhood or Country. The problem here is that the houses in the country are almost as expensive as the ones in the city center. The houses themselves aren't extravagant either, it's mostly because they come with 10+ acres of land.
Portland has great neighborhoods, but they're also drastically different from one another. A super nice house in a far east neighborhood might be $500k while the same house in a more desirable neighborhood could be $1m. Neighborhoods change quickly though, so I imagine much of the remorse from millennials is coming from moving to the suburbs, and not necessarily the less desirable neighborhoods (as they have hope those will gentrify).
I technically live in a city of 14k people, but it’s the largest municipality in the county. I’m about two hours from anything that can reasonably be considered a “city”, in a quiet neighborhood where there is practically zero traffic after 8pm or so. This was the most isolated property I could find that’s still got good Internet access.
Price-wise, there’s no comparison. I paid about $120k for a five bedroom house on half an acre. We were looking at townhouses in the last place we lived (Charlottesville, VA) with a tiny yard and half the living space that were going for $325k+.
We realized our mistake fairly quickly though and luckily were able to sell our house at a price so that we broke even on the whole deal, but it was definitely a valuable learning experience.
I think it's mostly true of 1960s-1970s construction (possibly 1950s-1980s) compared to the period shortly before that. But, also, survivorship bias: an older house must be better constructed to be still standing than a newer one.
I, personally, think this lack of openness in housing construction tends to keep people from interacting much with their neighbors. If your windows are open, people are more comfortable coming over and knocking on the door to say hello.
Years ago I worked as a landscaper. One of the sites we worked on was a 2 year old townhouse complex at the center of the complex was a 100 year old heritage building the developers weren't allowed to remove. It was beautiful, solidly built and will likely be standing for another 100 years. The townhouses though, there were several units having balconies, railings or even parts of their roofs replaced only two years after being built. They looked run down, parts of the foundation were already cracking, parts of walls were already beginning to rot. Gates and fences were broken. And this was in a fairly nice neighbourhood.
I've also talked with construction workers who worked on the False Creek development they built in Vancouver for the 2010 Olympics. There's only one building's worth of insulation in the entire development. When one building was nearly finished they brought the inspectors in, got their approval, then moved the insulation from the one building to the next one in time for the inspection.
I've probably rambled enough though...I could keep going on i've got lots first hand experience at just how bad modern construction is.
The article did suggest that you should get your home inspected before you buy it like pretty much every bank doesn't already require that. It also failed to mention that home inspections are largely useless.
Horseshit. When looking for a house earlier this year we had an offer accepted on a place we loved. Only question mark was the basement. Independent inspector took a through look at the basement and plumbing and basically said we will be living with water during the storm season without mitigation that could range between 5k and 25k. I have two plumbers in my family that took a look at the photos/report and confirmed the price estimate/work was spot on.
On top of that he found asbestos (we knew before hand) and high radon levels (we did not know). Needless to say the $600 I paid for the inspection was the best money I've spent in a long time.
Home inspections are mostly useless (i want to say always, but im sure there is some exception out there), but they're even more useless when they're provided by the seller and the market is so healthy that they don't feel the need to allow an independent view.
Compared to England, where every prospective buyer has to pay 3-400 pounds for a survey, as no bank will give a mortgage without one, I prefer having the seller provide the survey.
However, the surveys are useless themselves. None of the reports I viewed had any information I didn't see myself in the property, and as I was looking at victorian tenements, they all have warnings about pointing, flat roof, old guttering, which are present in _every_ 150 year old stone building...
Conflict of interest.
They know most people won't sue them over issues, especially if the courts are just as likely to side with them outside of some truly egregious violation.
There is also plenty of precedent for courts to side with the buyers in misrepresentation cases in the UK. The law has provision for 2 years in prison, and surveyors have been jailed previously for lying on surveys.
Single data point: I just (last week) had a title insurance claim for ~$21,000 for re-wiring of a property denied, despite the fact that I have documentation from the purchase process stating "All Knob and Tube wiring has been removed", and a home inspection report (seller provided) that did not uncover any K&T wiring. It was missed because whoever "removed" the old wiring (owner before the previous owner) left old wiring in between circuits and the outlets, which we found by accident when removing part of a wall. Electrical safety code requires that if we need to revise any wiring on these circuits that we bring them to current code, which to confirm there is no old wiring left at all means deactivating the circuit and re-running the entire circuit. Additionally my home insurance does not cover K&T wiring, as such i have 60 days to become compliant or my insurance is void.
My option here is now to lawyer up, which at best, I'm going to get $21k out of, for a $1.58m house. There should be stricter and clearer liability here, but unfortunately it's just not how the law is structured here in Toronto.
Not as many will tell you that the AC unit is 26 years old and likely to die soon. In my experience you have a 50/50 shot of them actually telling you that, but my sample size is very small.
Though my banks did require an appraisal, and the appraiser does do a physical inspection to look for signs of gross neglect. Many buyers here also waive their appraisal contingency too, so if the appraisal comes in low, the buyer has to kick in more cash to cover the difference in the loan value.
Even if we paid their fee they wouldn't even send someone out to look at the house, it would be 100% just looking at comps in the area--which we dismissed because it was the middle of the housing crash and almost every comp was a short sell of a unit that had been utterly trashed/gutted on the inside.
An appraisal without visiting the property does sound like a scam, how do they know the inside of the house is not gutted?
I can understand why the bank requires an appraisal, so it's not purely a scam, but I don't think it's an accident that most appraisals come in exactly at the selling price. The bank needs some independent 3rd party to verify that the house really exists and is not completely trashed. I assume the appraisers usually just take the selling price and work backwards to find comps and adjustments to support it rather than starting with the comps to come up with a fair selling price.
Though that's not always the case, I did have an appraiser save me $20K once -- the appraisal came in at $25K under the accepted offer price, the seller asked me to kick in an extra $25K on the loan, I said I couldn't. They asked me to meet them half way, and I said I couldn't, but I'd offer an extra $5K. They accepted and the deal went through.
The seller appealed the appraisal (the comps weren't perfectly comparable), but they already had a property lined up to purchase and didn't want me to walk, so they finally accepted the lower price. A month later an identical property in my complex sold for $50K higher than my original offered price (so $70K higher than what I paid). The SF Bay Area is a weird market.
I bought i super unique house, 100 years old out in the country. While talking to the appraiser asking him if the house was worth what i had offered, he said somthing like 'well if thats what your offering thats what it's worth'.
In hindsight, the market would tell me the house definately was not worth it.
Really i think the appraiser is there to prevent simple fraud.
The appraisers real job (when a mortgage is involved) for the bank is to assess the best offer they could get besides yours, since the bank wants to know what the property would sell for were your unable to pay the mortgage.
Presumably, if you are buying the house, you are (exceptions clearly exist, this is a simplified model) the most interested buyer, they really should be looking as to what the next most interested buyer would pay.
With large enough markets and commodity properties, which probably account for most housing sales, it's not entirely unreasonable to assume that the difference between those two is negligible, though, so I can see how it becomes a default approach.
The actual home inspector spent an hour or two inspecting the house and charged much less. I'd gladly pay him again.
According to whom?
We paid over £1000 in two different inspections when we purchased our house. Since moving in I've discovered that the entire extension to the house was built without lintels, electrical work which is not even close to complient and brickwork which is little more than rubble.
The structural engineer said he was unable to determine whether the lintels were sufficient (because they were hidden behind plaster and face bricks) and he said that there is some evidence of electrical rewiring but that we should commission a report into that.
If you want a useful opinion hire an experienced builder to assess the property - perhaps under the pretext of costing possible renovations.
When I was selling my mother's house a few years ago, a builder who viewed it instantly spotted all the problems that professional surveyors either missed or couldn't be bothered to mention.
That being said, I always hire my own certified home inspectors. Both my spouse and I have enough understanding to know when an inspector is blowing smoke and when they are looking at a real issue, and we monitor them while they do the inspection. A home inspector can't go into details on an issue - that isn't their job - they are only there to tell you what experts you need to call in during your option period.
Even when they aren't, finding a reputable one who will actually do a good job is extremely difficult. Most are just looking to run through a house as fast as possible and collect their fee. There isn't some directory of problems they've missed. As far as I know there isn't any way to recover costs from them over issues that they missed and caused you to buy a home that you would not have given the problems. This makes them quite prone to being a rubber stamp and yet another fee for home buyers.
Don't hire the agent's inspector. Likewise, make sure you have your own agent, don't use the seller's. And if you're in court someday, don't expect one lawyer to represent both parties. Simple stuff.
It's similar to buying a car: don't ask the dealer's maintenance department whether it's a good car. Drive it to your independent mechanic on the test drive and ask them to take an unbiased look at it.
If you don't know a reputable home inspector, you could ask your painter, contractor, or handyman if you have a good relationship with someone who knows houses to take a look.
They are hired by the agent
Another complication to be aware of: Inspectors can face "blackballing" by banks or realtors if they scuttle too many deals by finding bad things. If you find an independent inspector, don't balk at paying a little more -- they may need it to make up for business lost from being honest.
Not exactly. Real estate agents do care about repeat business and referrals.
My home inspector had a 1 year warranty on anything that he tested in his report. Does that mean the company will cover all damages or buy the property from you, no; but it is a small disincentive to be a rubber stamp.
And really, the most expensive repairs are on things you can't see. Wiring. Plumbing. Damage to the structure of the house.
Even then I wouldn't be surprised if they tried to weasel out of for example your roof started leaking 2 months after you move in. The inspector will point out that there was no water damage when he inspected it so the issue developed after the inspection.
Also friends, family, coworkers, local real estate agents you trust, etc.
Going into the entire home buying process without preparing adequately is the buyer's first mistake.
The buyer's second mistake.
Banks require appraisals, not inspections. While the two things seem descriptively similar, they are functionally radically different: an appraisal tells the bank a number that represents the market value of the house (used to determine if the value of home combined with the requested loan amount fits within the maximum loan-to-value ratio the bank is willing to accept—or allowed, for programs with mandatory limits), an inspection identifies specific problems and recommended corrections/mitigations.
> It also failed to mention that home inspections are largely useless
On both homes I've been involved in purchasing from the buyers side, the home inspection has been quite useful (though less critically so in the one that was new construction, though there's no guarantee that that is the case.)
Retirement account? What's that?
Equity is equity. In fact, targeting your savings into real estate right now might be better than a 401(k).
https://slate.com/business/2018/07/does-buying-a-home-count-...
In years past, young homeowners got gifts or loans from family to help assemble a down payment for a home. This really is no different, although it signals that the millenials' parents have no free cash to loan their children.
Or they're just (financial) idiots and decided to spend the same cash on a lavish wedding. It's hilarious (in a black comedy sort of way) how many people complain about not being able to afford a down payment yet spent more than enough for the down payment of an FHA loan on their weddings.
http://static6.businessinsider.com/image/4cf45f1d4bd7c8a2371...
The first contract went belly-up when we got a phone call from our lender the day before closing: “there is a cemetery on the property.”
It turns out some people were buried under the carport a few decades ago and we were told we would have to dig them up.
Who am I supposed to call and ask: “hi, can you help me move a body?”
As you may imagine, we walked away.
The second house was going along swimmingly until the HVAC inspector said that our ducts had asbestos tape on them and needed $4-6k in remediation, plus a rotten bathroom. The sellers claimed they didn’t have any money to fix it, so we left that contract as well.
Needless to say, buying houses isn’t my favorite activity at the moment.
….
well that's something that I've not seen on HGTV recently. :O
How did anyone find this out?
Did you ask whether they could just discount the sell price of the home or was it just not worth the time and effort at that point?
You have complete autonomy over what you do inside the property as long as you follow the zoning laws. E.g. I don't need anyone's permission to swap out an appliance or to make some holes in the ceiling for recessed lights or to run Cat6 to every room just because.
I can just do it. And the mortgage for a 1700 sq ft. house is comparable to renting a 2-br 1100 sq ft. apartment...
True, there's maintenance involved, but that's down to preference. I enjoy most of it and do it myself.
Society (American society, at least) drills it into your head...
You want to buy a house.
You must go to college.
These are societal metrics for success... and yet both often prove disappointing. You realize home ownership is way more expensive than you'd expected. You realize that fresh diploma does not mean a high-paid job.
Welcome to adulthood, the great re-aligning of expectations? :)
There should be no down payment requirement. There should be no PMI requirement. If you can prove you can pay rent for a couple years, there is no reason you shouldn't be able to get a loan for that same amount.
Its a loan. What does it matter if I get a $250,000 or a $260,000 loan? I don't think its proof of anything. I think its sham by banks.
I went with saving for down payment and getting a home. I'd say i made the right choice though. I just looked at rent cost for the apartment I use to have, and when i started renting it was $900; It's now at $1315 4 years later. My mortgage is at $1300, and I know it will always stay that way, too. Only downside is replacing things that seem to break all the time when you own a home :P
The nice thing is that you can choose to fix them yourself and save money. You can also use that as an opportunity to upgrade them and do the job right.
Once or twice a year, go through your house and check on the major parts like appliances, fixtures, etc. Make a list of what is due to be updated or repaired soon so you can save up money and do some research. Determine what is in your wheelhouse of what you can fix and what you need to call in a contractor for - personally I'll do appliance repair or drywall all day, but I refuse to go climbing into trees to prune them. Aim to buy good replacements - avoid fancy (easily broken) features, but splurge to get better made stuff. Don't be afraid to use quality non-oem parts either, since they are much cheaper and usually still very good. Youtube is a godsend for a lot of repair jobs.
I on the other hand chose to buy a house that needed a lot of work in the hope of accelerating the equity growth. Time will tell if that worked out.
The first house I bought was tiny. Two small bedrooms, a bathroom with a sink, tub, and toilet, a living room and a kitchen. Carport in back on a small lot.
I knew it wasn't what I wanted forever, but it was adequate at the time (no kids when we bought it, one when we sold it) and the payment was lower than rent on a similar sized apartment.
Gave me a tax deduction, and though it didn't appreciate a lot I didn't lose money on it either. When I sold it, I parlayed the original down payment, the small increase in equity, plus additional savings into buying a bigger house.
If you start off with a big house at the very upper end of what you can afford, you have a hard time saving more money and can be really hurt by unexpected maintenance and repairs.
Yeah. With fond memories of 20+ years ago when they actually existed in competitive markets. Unfortunately, house flippers have killed the "slow growth, sweat equity" path to ownership. Everything that can be improved, updated, or expanded in a competitive housing marked is done by flippers. Then, even 2 bedroom 1 bath "small" homes cost a fortune because they have stainless steel appliances & granite countertops covering up 50 year old galvanized pipes and electrical work with a limited number of grounded outlets. Flip with flashy improvements, drive up the price, and let the expensive infrastructure problems be a time bomb for the sucker that wants to live in it.
This is what we are facing. Our property taxes have jumped up substantially along with homeowners insurance, adding another $150/mo. and this was after a refinance that was supposed to save us $90/mo.
Renters have very little security, landlords are often unscrupulous with minimal regulation. Us Brits like to say that renting a house is money down the drain.
The market is absurd.
Paying a little more per month toward the balance is also a great way to save. Bad idea to base home-buying choices merely on what payment you can afford to pay every month.
I was getting my wires crossed on PMI because I tried several loan options.