Should Americans abandon the dream of home ownership?

We had the same problem when we were looking for a house. The realtors just kept showing us what we did not want - too big, too expensive and not enough land and privacy. We were preapproved for a $225,000 mortgage but I never told the realtors this. Instead I said that we wanted a house of maximum $160,000 (this was 9 years ago so prices are a lot higher now) and yet they kept showing us the expensive houses. We finally gave up on them and started looking for ourselves. Found the perfect place in 2 days. I think that when people assume a mortgage most think - oh I have 20, 25 or 30 years to pay this off so I am not bothered. In fact the longer you take to pay off the house the more it costs you. To pay off your mortgage as fast as you can with extra payments is actually one of the best financial investments you can make. All that interest that would be going to the bank is now in our pockets.

I think now is a great time to buy with values back to where they should be. Things got way out of hand with the get rich quick schemes and easy money. When you get into your retirement years county taxes and utilities will consume a large portion of your income. If you're still renting, just living could be a challenge. I'm just shy of 50 years old. I've lived in 4 different houses including my boyhood home, all that I've owned (excluding my parents home). All of this houses, including my parents, today, and including the one I'm in now are worth more than the original purchase price. I own 4 rental properties, none of which were purchased with zero down and are still worth roughly what I paid for them, but I'm not paying off the mortgages, so at some point they'll be nice for my retirement years. I made wise decisions on those purchases and wasn't looking at the short term to make a buck, but the long term investment. They were purchased at the right price, in the right neighborhoods, with the right money down and the right LONG TERM financing.

Overall realestate is still a good investment, its not the bad investment that wallstreet or others try and tell you that it is. Have you looked at your 401k or IRA lately? I've lost more money there in the past 11-15 years than I have in the housing market. You need to make wise choices and not look at a home as a get rich quick scheme. Buy a house that doesn't take more than 25% of your NET income to pay for. Stay there, make modest improvements, keep it up, make it energy efficient. You'll come out ahead in the long run.

It's really, IMHO, more a matter of common sense. Purchase a home within your means, period. There is a difference between a "dream" and a "fantasy."

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Becky

The dream should be abandoned by those who move continually. Owning a home means setting down roots... you're tied to that land.

Should also be abandoned by folks that aren't financially stable, those with bad credit, those without jobs, or have never had any of these. ...those folks who couldn't get a loan for a used car...

Should be abandoned by folks that haven't scrimped and saved, working several jobs to get a decent down payment.

Should be abandoned by folks that live beyond their means, buying more than they're able to pay for, if the economy shrinks.

Should be abandoned, forever, by those who bought an investment, and it's lost it's value, and they want to walk away because they're investment is worth less now than what they owe.

Some folks just aren't designed to be home owners....

I always get a hearty guffaw gut buster when folks like StickyBurr 'dis' homeowners. I own my home, my land, my vehicles, everything, free and clear.... No debt, no mortgage, no liens, no nothing... I'm allergic to debt, and avoid it at all costs. I can walk into the bank and get a loan at any time... for any amount... (when you own land, you've got something the bankers are always interested in) but I usually prefer to back up a loan with cash deposits. I did get a 'fake loan' two years ago, just to keep my foot in the door.

Yes, I pay taxes, just as I would if I were a slave to rent.... le difference is I have equity, renters have a big bag of diddly squat. Know some idjits who were offered a rent house 30 years ago... no, they didn't want to own, they might decide to move, didn't want payments... well, the ----------s lived there for 25 years, and paid for the house (in rent) twice over... they walked away with nothing... if they'd'a 'bought', they'd'a made their money back by at least double what they'd'a paid for it. Silly Squirrels...

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Luck is what happens when preparation meets opportunity. Seneca
Learning is not compulsory... neither is survival. W. Edwards Deming

There you go!

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ΜΟΛΩΝ ΛΑΒΕ

Not everyone builds equity. The couple who bought my parents' house, for instance. BTW, they weren't looking to own a McMansion, either -- just a 50-year-old, 3-bedroom, 1-bath, 1,100-square-foot ranch in a modest neighborhood.

I would guess it's going to be a long time before that house is again worth the $113,000 they paid for it. In fact, I'd wager it's more likely to reach the $15,000 my parents bought it for in 1953. (A house on the same block recently sold for $10,000, according to Zillow, but I don't know the backstory -- for instance, parents selling it to their kid?)

Switching gears ... Around here, the big new McMansions in "plans" are very popular. Ryan and Maronda are two of the big names. I clean a bunch of these houses and I'm consistently amazed by the dismal lack of quality. It appears that any standard feature not upgraded by the buyer is the cheapest available. It is disquietingly akin to the situation one finds when buying a mobile home, except these are houses in the $250,000-$350,000 price range.

I don't know if the buyers don't realize this -- if they don't have the discernment to recognize quality or the lack thereof -- or if they simply want into a plan (nice neighborhood, good schools) so badly that they figure they can live with paper-thin veneers and chintzy faucets. I rather think it's the former -- one client lamented to me that his "5-year" carpet was threadbare (literally) after only 18 months. I refrained from pointing out that carpeting rated "5-year" is very low in quality and he probably should have expected it to fail quickly.

I wonder what will happen to these homes. Most show serious signs of wear within 5 years. I can't believe they'll hold their value.

OTOH, I have a client who bought a rock-solid older home in town, with real hardwood floors and the original hundred-year-old woodwork ... for about half the price of a McMansion! Smart cookie if you ask me.

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"I love all of this mud," said no one, ever.

Back when my parents bought a house and stayed in it, my father worked for a large steel mill and was on the 30 and out plan. Now that is looked at as lazy and people who review your resume want to see multiple jobs with higher wage for each employment period and no employee or employer loyalty in the mix.
This is why people move. Because there IS no employer loyalty, therefore no decent raises, and people HAVE to change jobs to make ends meet in this country of ever increasing cost of living expenses.

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Nina's Grammy

We own our home outright and have never had a mortgage on it. The land was purchased outright at a farm auction and I built the house myself on a pay as you build basis. Its not a McMansion by any means but its suitable to our needs and quite comfy.

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"Nothing so needs reforming as other peoples habits." Mark Twain