What young people are saying about (not) buying homes

by Grace

Derek Thompson in The Atlantic compiled anecdotes illustrating young people’s views on buying a home versus renting.  Here are some selected quotes from his piece, following up a previous post about student loans as a reason that young people are not buying homes.  

‘WE WISH LIKE HELL WE HAD NEVER BOUGHT’
‘Get the hell out of debt as soon as possible’
‘Buying has really worked out for us’
‘I love the mobility that renting allows me’
‘JOB SECURITY NO LONGER EXISTS’
‘My generation wants more freedom to travel, to see and live in new places’
‘I did the math and buying came out cheaper than renting
‘A house is nothing but a huge time and money suck’
‘RENTING IS FINANCIAL SUICIDE’
‘I could not imagine ever wanting to buy a house’
‘Student loans: A drag on credit that negate the chance to save up a downpayment.’
‘Is home owning right for everyone? Goodness no.’
‘We got tired of building someone else’s equity’
‘I’m a committed renter’
‘I’M 28. I LIVE WITH MY PARENTS. IT’S MY CHOICE.’
‘I was so glad we were renting when our water heater blew out’
‘BUY SEVERELY BELOW YOUR MEANS’
I don’t think buying makes sense: We’ve weathered three layoffs since the crash’
‘I would recommend home ownership — in my Texas community only’
‘Don’t buy a fixer-upper unless you really, really know’
‘The days of home ownership being a good investment are NOT over…’
‘There are simply not enough places I want to live where I could afford a house/condo’
‘I would buy the house’

Back in my 20s when I had my first job out of college, the conventional wisdom was that buying a home was great investment.  Many of us felt pressured to invest in real estate, which had been increasing in value at a healthy clip over the previous decade.  So I bought a home, along with many of my fellow petroleum industry workers who were reaping the financial benefits of an oil boom.  Mortgage rates were 12-14% at that time.  Shockingly, home prices tanked shortly afterwards.  Gee, who could have seen that coming?

The market value of my home declined to about one-half of its purchase price, and I was stuck.  I don’t remember using the term “underwater” at that time, but that was me.  After leaving town and renting at a loss for several years, I was finally able to get rid of my house through a short sale.  It was a long and painful experience, but it taught me to be on the lookout for future economic bubbles.  It seems there’s always a new one on the horizon.

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5 Comments to “What young people are saying about (not) buying homes”

  1. We don’t learn from the past. Perhaps we think this time will be different. When I think back to my 20s, I realize I was completely financially illiterate. It’s embarrassing to admit, but I tell the story about myself that I had no clue on how the bank figured the interest rate on my money. “Wow, I get x% back every day?” Uh, no, that’s not the way it works. And I was a STEM major! Oh dear, it was pitiful.

    I’m not sure if kids are much better off today. I get “dumb” questions about personal finance from my “smart” kid.

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  2. Late in the last bubble, there were all these happy-talk articles about how young women were jumping in to buying condos in their early 20s.

    http://cooperator.com/articles/1398/1/No-Longer-a-Mans-Castle/Page1.html

    http://www.usatoday.com/money/2006-02-14-women-houses-usat_x.htm

    At some point during the last boom, 1 in 5 homes were bought by single women, while only 1 in 10 homes were bought by single men.

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  3. From a 2011 article, it looks like the “gals” are still at:

    “According to the National Association of Realtors, last year unmarried gals made up 20 percent of all home buyers, where single guys accounted for 12 percent.”

    http://today.msnbc.msn.com/id/43687083/ns/today-money/t/singles-dive-real-estate-market/#.T2Ia1cXCmHA

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  4. That’s interesting. Hopefully it’s mainly older women this time. A 1-bedroom condo purchase for a 20-something is such a limiting move romantically, professionally, etc.

    At least now homes are quite a bit cheaper. Before we left DC in 2007, I was seeing $400k new one-bedroom condos for sale.

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  5. I must add that my second time around in my home-buying experience, I bought at almost the exact trough in home prices around here, making out much better than my first try. Needless to say, I was much more cautious the second time around.

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