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financechoices
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| Young people shun property |
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Buying a property is seen as both impractical and undesirable to a large number of 18-to-34-year-olds, new research reveals.
GMAC-RFC, the UK?s tenth-largest mortgage lender, reports today that a new generation of young professionals would rather rent in fashionable areas near their friends than commit themselves to a mortgage and a worse address.
As more people go to university - entering the workforce later in life and saddled with debt - property prices rise, and the number of rental properties increases, the nation's youth is moving away from the traditional desire to buy a home and settle down.
Full story
What can be done to get young people investing in property? Does it matter if they're not investing?
UK Finance Forum | Loans | Credit Cards
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Mon Aug 15, 2005 6:25 am |
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efflandt
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I wish I had bought a home 20 or 30 years ago instead of 3 years ago. It might be paid for by now. At least I refinanced to 20 yrs instead of 30 yrs (saving $62k in interest), so unless I pay it off early, it will be paid off when I am 73 instead of 80. But I am gradually converting money from an IRA to a Roth to take care of that, and maxing out my 401k.
I guess some people do not realize that having a home paid off by the time you retire can greatly reduce the amount of money you need for retirement, or greatly increase the amount of free spending money, and also provide some reserve when you eventually sell it. But I lived in apartments for 27 years, so I am not really setting an example.
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Tue Aug 16, 2005 4:26 am |
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auggyf
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Hey ... I don't blame them, myself included in that list.
Buying a home in my area (Bay Area, CA) is simply too expensive and won't get me to where I want to live as a single, young professional. I'd rather live with friends and take all that money I'm saving and invest it in other kinds of assets (ie. not residential real estate in the bay area).
I think the problem we should be focusing on more is our (western) societies' consumer attitude; in general (not just young professionals), we spend about as much as we make and save very little, or less than nothing.
When properties taxes and homeowners' assoc fees cost as much as an apartment (ignoring the actual mortgage!), I don't see any problem with renting as opposed to buying. But I might be speaking only for my market...
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Sat Sep 24, 2005 7:50 pm |
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Rolo
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quote:
Originally posted by efflandt
I guess some people do not realize that having a home paid off by the time you retire can greatly reduce the amount of money you need for retirement,
Most people do not realise that paying off early greatly reduces the amount you HAVE at retirement.
"Expect me when you see me."
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Sat Sep 24, 2005 10:19 pm |
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diego
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quote:
Originally posted by auggyf
Hey ... I don't blame them, myself included in that list.
Buying a home in my area (Bay Area, CA) is simply too expensive and won't get me to where I want to live as a single, young professional. I'd rather live with friends and take all that money I'm saving and invest it in other kinds of assets (ie. not residential real estate in the bay area).
I think the problem we should be focusing on more is our (western) societies' consumer attitude; in general (not just young professionals), we spend about as much as we make and save very little, or less than nothing.
When properties taxes and homeowners' assoc fees cost as much as an apartment (ignoring the actual mortgage!), I don't see any problem with renting as opposed to buying. But I might be speaking only for my market...
I COMPLETELY agree! I'm moving to SoCal, and I don't see how it makes any sense to buy at all! A good friend of mine bought a nice home and the figures went something like:
Home (4,000sf new construction, very nice home/neighborhood): 1.25 million
Landscaping: 200,000$
HOA fees (monthly): 480$
Taxes: Flat 1% annually
Interest on a Jumbo: Who KnowS?!!
Compared with:
Rent, in a very nice area in a nice apt:
1,400$ monthly...
In all, I think people like my friend are in debt to their eyeballs. Although they have a gorgeous home, they're essentially living paycheck to paycheck... doesn't seem like a sound financial approach to me.
Am I missing something here?
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Sun Sep 25, 2005 12:58 am |
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auggyf
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Hi Diego,
I think what we're forgetting is that a lot of people buying homes today are:
1) Buying a highly priced home is not nearly as difficult if you've just made a lot of money in your existing home. If my home which was not worth much 5 years ago is now a million dollar home, it's not a big deal to buy say a $1.4 million home. What you might not be asking is what you could be doing with the gained money besides the investment in residential real estate...
2) speculating that housing prices will appreciate substantially. Just like buying stocks on a margin, if I put 5% down on a home and it increases 5% in value, I've essentially made 100% of my initial investment! Similarly, if it goes down 5%, I've lost 100% of my initial investment... Granted there are some liquidity and usefulness differences between homes and other investments, but in general people may be willing to put a large portion of their paycheck, plus money from other sources (family, investments, etc) into a home expecting it to be worth it if housing prices continue to increase substantially.
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Mon Sep 26, 2005 2:34 pm |
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forexdaytrading
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auggyf & diego,
I agree with both of you. All this stuff about "throwing money away" when you rent is ridiculous. Right now renting is a lot cheaper than buying a home. Prices have gotten out of control, so it makes more sense to rent. When rates go up a few points and the forclosures begin, home prices will come down to more reasonable levels. That is the time to buy.
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Sun Oct 02, 2005 7:56 pm |
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