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Esteemed Contributor
Posts: 5,188
Registered: ‎03-11-2010

Re: Feeling stuck in a starter home

@pitdakota

I think it may be a better option for some young people/couples to rent first - because there's no job stability anymore. Years ago, the husband was able to pay the mortage -- today, it usually takes 2 salaries. If one of them is laid off or has their hours cut --- they can lose the house. This happened to thousands of people in 2008 and later. With higher priced homes - the property taxes are very high - plus insurance and upkeep. Utility bills/cable, etc. have also gotten high.

Where I live in Oxnard, CA - rents in nice apartment complexes are very high as well. Nothing beats owning ur own home - but u need the down payment and lots of cash in the bank before purchasing. There are many homes in my area with more than one family.

Respected Contributor
Posts: 3,970
Registered: ‎03-16-2010

Re: Feeling stuck in a starter home

[ Edited ]

@kivah, I would think job stability would certainly  come into play for many people.  But the article from CNBC discussed the cost of purchasing a home has risen 14% while renting has increased 4%.  Therefore, renting and saving the money over time by renting can then be invested later in a home for many in the country.

 

The title of the article for anyone wanting to google is:  It's better to rent than to buy.  I don't want to link the article.  Let's see if I can copy it here:

 

It is better to rent than to buy.  Authored by Diana Olick from CNBC website:

 

It is easily the question most asked by anyone moving into their first home or downsizing into retirement. Should I buy or should I rent?

For nearly a decade the answer has been buy. The crash in home prices, combined with record-low mortgage rates made buying and owning a home both cheaper than renting one and a better investment.

Now, the tide has turned.

 

Fast-rising home prices and higher mortgage rates have shifted the calculation to rent. The monthly costs of buying and owning a home that you occupy are up 14 percent over the past year, more than three times the annual increase in rent rates nationally, according to realtor.com. Rents are up just 4 percent. The number of local housing markets where it is cheaper to rent than buy is growing by the day.

 

"Even setting aside big upfront expenses like a down payment, rising month-by-month costs are likely keeping many people from purchasing," said Danielle Hale, chief economist at realtor.com. "Today only 41 percent of people live in a county where the median-income family can afford to buy a home at the median list price, and affordability declined significantly over the past year."

 

Home prices fell dramatically after the financial crisis and the subprime mortgage crash. Millions of homes went into foreclosure and were sold off at bargain-basement prices. Home values finally bottomed out in 2012 and then began to take off. In the last three years, the gains accelerated dramatically, and now homes in most of the nation are worth more than they were at the inflated peak of the housing boom in 2006.

 

"It's normal," said Richard Bernstein of Richard Bernstein Advisors on CNBC's "Squawk Box." "Housing is an early cycle sector. Interest rates are low, incomes start to grow, so in an early cycle environment you can buy, but in a later cycle, interest rates go up, home prices go up, it's harder to buy."

 

The recent acceleration in home prices has been due to a supply imbalance in the market: too much demand and too little supply. That has shifted the equation back to rent, even though rents have increased a lot in the last few years.

 

According to July home and rent prices, buying a home was cheaper than renting in just 35 percent of the nation's counties. That is down sharply from 44 percent just one year ago.

 

And it's not just cheaper to rent, it may also now be a better investment. Renting and reinvesting the savings from renting, on average, will outperform owning and building home equity, in terms of wealth creation, according to new research from Florida Atlantic University and Florida International University faculty. That is the first time renting outperforms buying since 2010.

 

In 16 of the 23 major metropolitan markets covered in the research, renting is a better investment than buying. These cities include Atlanta, Dallas, Denver, Houston, Los Angeles, Miami, San Francisco and Seattle. It is still, however, better to buy than rent in much of the Midwest and Northeast, with Chicago and Cleveland showing the best ownership scores.

 

So what does all this mean for the wealth of average Americans and the health of the housing market?

"Since homeownership has historically been an important source of household wealth creation, it could be problematic if this trend continues for too long," Hale said. "Still, even in places where renting is currently more affordable, rising home prices provide wealth-building opportunity for homebuyers."

 

So different than when we bought our home and my mother-in-law went over the advantages of owning verus renting.  Although according to the article, some areas of the country it is still better to buy than rent (Midwest, Northeast, Chicago, & Cleveland.


* Freedom has a taste the protected will never know *
Respected Contributor
Posts: 3,605
Registered: ‎07-11-2010

Re: Feeling stuck in a starter home


@occasionalrain wrote:

Why is it that some posters can't seem to resist shaming others. Those who planned their lives, worked in uninspired jobs to get through college then later did without to save deserve the reward of their sacrifice. 


@occasionalrain...I apologize if my comment offended you. I had no intention of "shaming" anyone, and I don't think the other posters did either. We were simply stating our opinions on the subject.

I promise to remind myself every day that I am strong, courageous, and resilient.
Esteemed Contributor
Posts: 5,760
Registered: ‎03-10-2010

Re: Feeling stuck in a starter home

@nana59


@nana59 wrote:

bought our starter home in 1976......still here...remodeled once.....just never felt the need to move....already willed it over to our children!


ITA.  Brought mine also 1976.  Forty two years , original owner.  Lots of remodel during those years.  I brought small enough so when the three kids left, I could take care of it in my elderly years.  Paid 39,000 for four bedrooms, two baths, kitchen, family room, living room.

Will now 82 and take care of it easily.  Did an almost maintance free front yard, and large back yard, stone and cement, potted flowers.  No help yet.

Now worth almost 600,000 here in Northern Cal. Wine Ckuntry.  Never felt the need to get a huge home.  Three kids, four bedrooms. Big enough..  Friends that got bigger houses, have downsized, some to assisted living.

 

This is my 2Nd home.  First one cost 5000 in 1961.  That had three bedrooms,, one bath, kitchen, dining and living room.  Wish I kept that one, but needed a little bigger one as kids got older.