Don’t disagree although I do count it in my net worth - but I undervalue it by 20% just in case.
But it is an asset with equity - just poor growth possibilities.
Of course, others end up renting their prior homes out and seem to do well. I’m afraid of it personally but others build their wealth this way.
I think if home ownership is high on the list of any young people job searching then they need to consider parking their life in an affordable area for a period of time. I don’t know if that period is 3 years, 5 years or more. But there is affordable housing out in some areas of the country. That may give them the jumpstart they need to have homeownership, not break the bank, build some equity and then take their $$ elsewhere in a few years.
I guess it’s sort of a which comes first in priority - what you live in or the place/region you live.
There are bars, restaurants, colleges, nightlife, recreation, shopping - all the indulgences of life everywhere - not just on the coasts or big cities.
Pretty sure their mortgage is a little cheaper than what they would have paid in rent on the place they were living. BUT, they were living in an area much closer to DC. When they moved they were WFH, but now one has to go into the office daily.
Families that include people of color (parent(s) and/or kids) do have to take that into consideration when they pick a place to live. Sure, there are LCOL locales but often with not-great schools, and private options are often less diverse. (Not always!)
I’ve mostly rented and we managed to thread the needle with the extremely complicated NYC public school system. I was happy to give up creature comforts to stay in inner-city Brooklyn vs living in the burbs. I grew up in a working-class suburb and hated it.
Yes, my son in Poland and his wife think they want to live in a city like Boston. Yikes. They say they’ve researched housing costs, but I can’t imagine that renting or home ownership would be feasible for them there.
That’s a good story. Nice that he will be able to save toward the inevitable extra costs of home ownership (repairs, new roof etc). Unfortunately the more typical situation is outlay >> rent. Home ownership can still be the right decision, IF affordable. (I get annoyed at real estate agents on FB commenting, “oh for that rent you could pay a mortgage”, and they don’t mention the other monthly outlay expenses of tax, insurance etc. And they pretend there are no other extra costs.)
We’ve seen so many reasons home prices have soared. A ‘perfect storm’?
• So many individuals and contracting companies lost BIG in the ‘great recession’ and never returned to construction. Fewer tradespeople, fewer contractors, and fewer new builds add to the shortage. Fewer students were encouraged to go into the trades as well. Low supply = higher cost.
• Zoning laws restrict new denser construction. NIMBY? Frankly, I too would be upset if the home next door was demolished to build a 10 story apartment complex with 90 units, but only 42 parking spaces. That is actually happening in my rental neighborhood (of older historic homes). Noise and future parking will be a significant issue (most residents only have street parking). It is our rental, and we can move. Not so easy if it were our home.
• Many more singles were purchasing homes in the last 10-20 years, much more than a generation or two ago. More buyers for less homes adds further to the shortage.
• Interest rate changes lock many into their homes if they want, or need to move. This affects jobs, but also retirement. We own a nice home, in a great school district, that would be perfect for a young family. Yes, it has increased in value over 30 years, but not nearly as much as most cities. Keeping our current home, prevents another young family from the opportunity. We’ve considered downsizing, but to do so would cost us far more than staying.
• I’ve mentioned on earlier threads how our first home mortgage was 14%. BUT, the cost of our first home was approximately 1.5x our combined salaries. DD & SIL purchased a “starter” home recently in a VERY HCOL area. Their mortgage rate was about half of ours ( approx. 6.75%) but the home cost is nearly 6x their combined salaries. The house is ½ the size of our starter (+/- 800 SF), and nearly everything needs an overhaul, adding even more expenses over time. I tried to encourage renting, but they desperately wanted their own place, and looked for nearly 2-3 years while prices continued to skyrocket.
• I read a recent statistic that about 1/3 of the starter homes in my home area were purchased by investors. That’s HUGE. Young families cannot compete with those (usually cash) offers. Investors do a quick upgrade, and either flip or rent, often with the plan to increase rents.
• Many young families are looking for small yards, or at least safe nearby parks. Not all communities offer these environments. Renting a home can also be precarious. DD was forced to leave a rental with roommates when the owner decided to sell. Can’t blame the owner. They made a HUGE profit selling to a developer. Apartment buildings are a bit more secure – until they aren’t due to significant rent increases.
S and his GF bought a home this year. They probably have a low 100s income. Are demon savers; very frugal. Bought their house for a bit over 500K. They’d lost out on several more expensive homes, probably for the best, and bid high on this two bedroom fixer upper to get it. Thankfully, when problems came up on inspection, they got some money back to rebuild an exterior wall that was rotting away, eek!
It’s tiny, still needs other upgrades, in a HCOL area, but the big selling point is a lake behind them. The mortgage, along with high NJ taxes, is much higher than their rent, but as I said, they are super frugal and making it work. Every time you look out the (new) big windows in back, and see the sun shining on the lake, it is totally worth it!
[Edited for the sake of authenticity.]
This is a reason there’s a construction boom in Philadelphia. They are offering a 10 year tax abatement on new construction. Building townhomes left and right.
You can afford more house when you don’t have high New Jersey taxes.
That’s how we were able to stretch our qualification for mortgages the first two times. New construction properties were valued at land value in the first year for tax purposes… so lower payment. Back then mortgage companies were pretty strict about % of income going into payment.
However, if you have a large mortgage on it, it is highly leveraged, so you gain or loss can be quite large compared to your down payment.
So a small rise in house prices can produce a large gain through leverage. But a small drop can be a financial disaster.
What specifically about @abasket post #22 is something specific to people of color?
That’s very open minded of you 
While I agree that primary home is not part of an investment portfolio, typical net worth definition includes non-liquid assets such as real estate, including primary home. If you want to access equity from home during retirement, there are many ways to do so. Examples include selling your home, then renting; or reverse mortgage.
Just a reminder to stay on topic and not turn this thread into something contentious.
"I guess it’s sort of a which comes first in priority - what you live in or the place/region you live.
There are bars, restaurants, colleges, nightlife, recreation, shopping - all the indulgences of life everywhere - not just on the coasts or big cities."
My s/DiL did not feel confortable in all places. They found a house that was most of what they wanted, and when they came to the open house all was well — but when they went back to the car, the neighbors across the street had put up a politically charged decoration, and they noticed a few more. This was more than the usual benign personal opinion stuff.
Not to start a political debate, just saying that there are lots of factors and not everybody has to consider the same ones.
I don’t disagree with that but I don’t know how my statement relates to it. Not everyone wants all the things I mentioned either - it was just a listing of many things younger adults might be looking for. Add neighbors/political views to the list!
Actually don’t know what you mean.?
They say every day how they feel like they have found a slice of paradise. But it’s big of me to feel like it was the right decision? Really don’t get what you are implying.
I think you meant Son and GF not Husband and GF?
Oh geez! Totally missed that.
That makes way more sense (I probably would have sent a PM, but it’s funnier this way.)