<p>We have talked about helping our kids with a down, but are not sure if we have enough available to help all of them so are thinking to let them buy what they can afford and help with post-purchase surprises- window coverings, appliances, beds, etc. I still remember moving into my first home, I think the interest back then was in the high teens, my entire monthly take home covered the mortgage, not including the insurance and taxes! It was a stretch. The day we moved in we discovered the guy who moved out took every single light bulb with him, even the oven light. $85 for light bulbs was quite an insult that day</p>
<p>Have not talked specifics with S, only know he’s started to be irked at the money he’s been paying for rent since he started working. Will see realtor cousin tonight and ask her if she has anything for us to consider and also to show S about renting vs buying. </p>
<p>Do most young adults believe they are staying in one area for 3 years or so?</p>
<p>I can’t imagine being tied down to a house in this employment atmosphere. </p>
<p>My son is getting a masters on line ( well regarded program) just so he can continue when he goes out of town for work or if he gets relocated. This also gives him the flexibility to take a new job somewhere else and not miss a beat with school.</p>
<p>The minute you sell you are losing 6% to a realtor.</p>
<p>The amount of money saved would have to be great in order too give up so much flexibility.</p>
<p>Most young adults don’t, but most young adults don’t buy houses, either. By the time we bought our house, my fiance had been in his job for almost 10 years. I’d been in mine for two, but we don’t need my income for the house. </p>
<p>To me, this idea that you should be ready to up and move for a job at any moment at my age is really foreign. Nobody in my family has ever moved away. There are just under 10 of us in my generation of the family and everybody found jobs here. You do whatever you have to do to stay together. There are lots of places to work here. But, if you want to be able to move around a lot, I can’t imagine why you would want to buy a house-- and that’s most of the people my age I know. I only know one other person my age who owns a house, and I don’t think she should have bought one.</p>
<p>Found a calculator to help quantify the rent vs buy decision. </p>
<p><a href=“http://www.yourathometeam.com/rent-vs-buy-calculator.php”>http://www.yourathometeam.com/rent-vs-buy-calculator.php</a></p>
<p>We took our time when we decided to purchase our home and are glad we did, as we still enjoy it more than two decades after purchase. </p>
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<p>With the internet and all, how hard is it to sell by owner now?</p>
<p>I was just scrolling down to comment, and saw that Sax wrote my thoughts. Owning a place really ties a person down. It makes it harder to take a new job, even one that is not too far away, but far enough in a “bad” direction to make a commute miserable.</p>
<p>Especially for a person working in or around DC, the commute can go from lovely to horrible, starting from the same place and going the same distance but traveling in a different direction. </p>
<p>I would think about that particular effect of home ownership in the DC area before buying, particularly for a young, single person.</p>
<p>Both my kids live in Manhattan and it is a very different market. Besides the mortgage payments you have to pay an extra $2.3K a month for taxes and fees for a 2BR which cost >$1M. The calculator usually says if you can stay more than 5 years in one place, then it may be worth it to buy because of all the costs associated with buying and selling.
My S just bought a 2BR co-op in Greenwich Village and the board mandates no gifting, no buying for children and no subletting. If his salary history doesn’t match up with his savings, then the board can reject him. He couldn’t have parental help and he didn’t need it. On the other hand, there are some buildings that have more lax rules.
My D and her H are paying almost $6K for a 1BR apt in Manhattan. However, they are not sure of staying in Manhattan in the next 5 years so they are not buying.
Renting is cheaper than buying most times in Manhattan especially for those who may not wish to live there to raise kids. Lots of professional high earners rent because the tax savings are not that great given tax deductions get phased out plus AMT in the top bracket.</p>
<p>I was living in a not so nice area of Boston, and began looking for nicer place to rent. when I realized rent would be 3x as much, I decided to stay put and save for a condo. When I did buy (early 30"s), I got a 3 bedroom in great area. Had I stayed in that city, I could still have lived comfortably in that place. It easily held 2 adults and a child. I don’t think one should buy unless one plans to be there for some years (I don’t know statistics, 6,8, 10?). The real estate market is iffy and one has to plan on finding an s/o.</p>
<p>Here’s a zillow calculator that looks interesting</p>
<p><a href=“Should You Buy or Rent? Depends on How Long You Want to Stay and Where You Want to Live (Of Course) - Zillow Research”>http://www.zillow.com/research/should-you-buy-or-rent-depends-on-how-long-you-want-to-stay-and-where-you-want-to-live-of-course-3003/</a></p>
<p>For years buying made total sense in the NY suburbs, and I think it does again. But the poor people who bought between 2004 and 2009 or so are suffering. Our house tripled in value, then lost about a third, and now it’s climbing back up there. Given what houses in the neighborhood are selling for I think we would not have any trouble getting more than double what we paid in 1999.</p>
<p>I think a gift toward a down payment is a generous and responsible act. Think about how much later people get married nowadays compared to 30 and 50 years ago. Helping a young couple get their first home was SOP for parents who could afford it. It makes sense to make that gift earlier in a young adult’s life rather than in the mid-late 30s when they are likely to get married.</p>
<p>It’s all so market dependent. We have made a profit on every house we’ve owned; the last house we made a significant profit after living there 15 years. If we’d tried to sell it in 2009 we would have been in trouble.</p>
<p>The reason we bought our house when we did was because my fiance was already shopping before we started dating. I am really, really glad he put that on hold when we met, otherwise he would have purchased a tiny house in an area with mediocre schools and iffy crime rate, which was perfect for a single guy but not so much anybody else. He had no idea he was about to meet his future wife and that he would be married in two years. He would have had to sell and come up with another downpayment on a different house more appropriate for a young family two years after buying the first house. I also would never have been willing to live there, it was way too far from my work, so we may not have even continued the relationship if he was committed to living there. The need for flexibility in young single people doesn’t just apply to their careers. You never know when you’re NOT going to be a young single guy anymore. I don’t know that I agree that it makes sense to provide that help to a young single person because people get married later in life, to me that’s a reason not to do it unless you expect them not to keep the house and to be able to pull together the resources to buy the second one.</p>
<p>Among the things to reflect upon in buying real estate is that without inflation, someone who moves at a national average rate incurs enough expense to wipe out his initial equity of twenty percent in twenty years. This assumes a 6% real estate commission and moving every 7 or so years. Lower equity investments get erased more quickly, obviously. </p>
<p>Of course, with all the money printing being done by the Fed, stable real estate prices seem unlikely long-term (although I don’t see them taking off here in the short run either).</p>
<p>Have raised the flexibility issues with S, as well as how long he intends to live ANYWHERE. H is also concerned about the projected decrease in federal employees/downsizing that will be a drag on both HI and VA/DC, including housing prices and the respective economies. There are so many unknowns with real estate. Though we love our home, in the 20 years since we bought, we could have done MUCH better in the stock market in terms of the investment we made. Still, we didn’t have to pay rent by paying the mortgage instead.</p>
<p>S is just toying with ideas–it bugs him that rent is such a big portion of his expenses and he’s just trying to consider options. He is happy living alone and hasn’t had a room mate since he graduated from college 3.5 years ago. Never shared a room since he was a toddler before then and enjoys the space to himself.</p>
<p>If you look at the amortization schedule for a typical 30-year mortgage, the borrower pays much more interest than principal in the early years of the loan. For example, a $100,000 loan with a 6 percent interest rate carries a monthly mortgage payment of $599. During the first year of mortgage payments, roughly $500 each month goes to paying off the interest; only $99 chips away at the principal. Not until year 18 does the principal payment exceed the interest.</p>
<p>Buying a home for short term purposes makes no sense since you build up so little equity in the early years of a loan.
Lots of people just look at the purchase price and the selling price of their home and think they’ve made a lot of money but they haven’t added up the transaction costs, insurance, interest payments, repairs,taxes and loss opportunity costs if you invested the down payment.</p>
<p>This is the best rent vs buy calculator I’ve seen. Use the advanced settings.
<a href=“Is It Better to Rent or Buy? - The New York Times”>Is It Better to Rent or Buy? - The New York Times;
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<p>Again, it depends. DH and I bought a house for the lot value when we decided to build in a very desirable neighborhood. After we closed, DH found a larger, more appealing lot. Two months after we bought the house, we sold it for 20K more than we paid. </p>
<p>How much did you actually NET?
I assume you paid in cash and sold it by yourself thus saving you a bundle in costs. Your case is an outlier.</p>
<p>^^^^Not at that time in that neighborhood of tear downs. If you were willing to work hard to find a home for sale which was not yet on the market, you could do well.</p>