I bought my home in 2009 during the subprime mortgage crisis. I intentionally waited for this period before buying. My VHCOL area was hit hard by the loss in value. A large portion of homes were underwater on their mortgages. In some neighborhoods, it seemed like the majority of homes were for sale, and those selling were short sales (underwater on mortgage, bank generally takes loss). I bought the home for $800k from a guy who owed ~$1.1M on his mortgage, as I recall. Over $100k worth of AV and tech equipment was also included as part of the sale. I closed on the day before the short sale became a foreclosure, which helped with price.
Today the home is worth ~$2.5M, which corresponds to an annualized return of ~8%/year, without considering the AV/tech equipment. That’s the norm in my area. I almost purchased a different home. The seller accepted my offer, but I backed out due to major issues revealed in inspection. Looking up the home today. I see that it sold for $2.4M last year, which was an 9%/year annualized return over my accepted offer of ~$700k.
These aren’t mansions or especially extravagant. The home that sold for $2.4M last year is 2800sqft and looks like a typical suburban house from the outside. That’s just what typical houses sell for in my area. It’s difficult to find anything that is 2000+ sqft with small yard (not condo) for under $2M.
This of course makes the market especially challenging for young persons. It can also create some unique solutions. For example, I used to date a woman who shared a suburban home with 5 other women She had her own very small bedroom. Areas like the kitchen and living room were shared. She paid a monthly rent and was not an owner. As I noted earlier in the thread, moving back home with parents is becoming an increasingly common solution. However, most common is probably getting a basic apartment and live a long distance away from job, with long commute.
I have a kid in this position. Engineer married to an engineer. No advanced degrees though.
No student loans. Live on one income, save the other. Saved enough to put 20% down on a home. Live in a very nice neighborhood. Not in Boston or New York City or California or Seattle. Nice suburban neighborhood in a 4 bedroom, 2.5 bath colonial. Boring old engineers who live a boring life in the suburbs.
DH and I each have a master’s degree in engineering, but we didn’t have that easy a time of it, with the economy plummeting in the early '90s and then again in the Great Recession. I thought we were going to go out of business at one point. As a result, we still have a sizeable mortgage, sigh.
Yes, they were both lucky to find jobs when they graduated during the Great Recession. One was laid off during the pandemic but since they lived on one income, it worked while the other was looking for a job.
I’m sure they are paying down the mortgage. Paid cash for a kitchen renovation. They are thrifty and I’m of course very proud.
Unless your taxes become astronomical with the market value of your house. Our 50+ years old house just crossed a million $ mark… It is not palace, and we payed for it 1/4th of its current price 25 years ago. If prices and taxes will continue to climb we will not be able to afford to live in it at retirement…
Both of my kids live in a home they own. D1’s apartment is valued higher than mine and bigger. D2 will trade up before they have kids. My kids are not out of norm between their friends. Most of them own their homes and they are not shoe box sizes. A lot of their friends are around NYC, Seattle, SFO, DC or Boston.
I made a comment in the “Where the Democrats went wrong in the 2024 election” thread about changes in affordability of homes, cars, groceries and other items between 2020 and 2024 contributing to the loss. A graphic from the post is repeated below.
A moderator split off replies from the post in to this thread. Nobody intentionally started the thread, so looking at the initial few posts out of context may not make sense.
I recognized his name (Ramit Sethi) from a podcast I listened to on a walk. Once again it’s The Diary of a CEO with Steven Bartlett. Here’s a link to the transcript (episode from 10/14/24):
It touches on some gender money issues that I found thought provoking. As with most things I could agree with some points of the discussion, but not everything.
Yeah, my post was the first one split off from the other thread, so it looks like I started it, but I didn’t. I think it’s an interesting topic, though.
My two youngest are saving a lot of money and will use it one day to buy a house but neither is any hurry and both have a good sense of “value” and whether the cost of that house is worth the money they are asking. Also, they are both in engineering fields that may take them to other locations and they definitely don’t want to get stuck with a house. They keep maxing their retirement and putting some in investments and HYSA and will be ready when the time comes - neither is married and only 1 has a significant other. There is no need to hurry and in the meantime, they travel.
