How important is home ownership?

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I read an article today that said that one-fourth of current renters will never buy a home (or at least don't ever plan to as of now). So presumably, the actual number of renters who never buy a home might be higher since this estimate excludes those who currently PLAN to buy a house but will never be able to for financial or other reasons.

I know home ownership used to be a cornerstone of the American dream. But back in the day, you could modestly support a family on one income, even without a college education. Things are obviously very different today. I know for me personally, it was always a goal to own a home. But I wonder if home ownership has generally become less important as a personal goal or measure of success.
 
Ridiculous home prices probably is a big factor in all of this.

Being a renter for a short period of time (and its headaches) has made us appreciate owning more. While I do recognize the benefits of renting (other than financial), if you are planning to stay in an area for an extended period of time, raise kids, are financially stable etc etc etc... owning has the upper hand.
 
Being able to move (as a renter) has been extremely beneficial to us over this recent downturn. I know a lot of people that are now commuting 50+ miles (in a major metro area) and/or 2+ hours each way just to get to work now because they bought a home that they cannot sell. I have to feel like a lot of current renters share my sentiments about being able to relocate for work and having that flexibility. Maybe when we know things are a little more "stable" people will change their opinions.

I will not be a lifelong renter, but for now it makes sense for us.
 
irvinehomeowner said:
Ridiculous home prices probably is a big factor in all of this.

Being a renter for a short period of time (and its headaches) has made us appreciate owning more.
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Im pretty sure owning has its headaches as well (unless its a newer house).
 
I plan on buying a home when the time is right. But renting for the past few years has been  a good experience. The flexibility of changing locations and floor plans has always been a big plus. I've also had a chance to experience several different villages within Irvine without the cost associated with buying.
 
Maybe because I'm not married or have any kids, there's no sense of urgency for me to buy a home.  A part of me enjoys the flexibility of being renter and when something breaks down I just call up TIC and they fix it within 24 hours on their tab.  That being said, when my income becomes a little bit more stable and predictable and the right property comes along I'll be a buyer.
 
USCTrojanCPA said:
Maybe because I'm not married or have any kids, there's no sense of urgency for me to buy a home.  A part of me enjoys the flexibility of being renter and when something breaks down I just call up TIC and they fix it within 24 hours on their tab.  That being said, when my income becomes a little bit more stable and predictable and the right property comes along I'll be a buyer.
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I have hard time understanding what attracts single people to Irvine.  My perception is that Irvine is nice for a family but is boring for singles.  Can you shed some light?
 
Irvine2Irvine said:
USCTrojanCPA said:
Maybe because I'm not married or have any kids, there's no sense of urgency for me to buy a home.  A part of me enjoys the flexibility of being renter and when something breaks down I just call up TIC and they fix it within 24 hours on their tab.  That being said, when my income becomes a little bit more stable and predictable and the right property comes along I'll be a buyer.
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I have hard time understanding what attracts single people to Irvine.  My perception is that Irvine is nice for a family but is boring for singles.  Can you shed some light?
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Honestly, there are a few significant reasons for myself.  One, it is centrally located in terms of being a realtor showing homes up in Yorba Linda/Fullerton/Anaheim Hills to Long Beach/Huntington Beach/Costa Mesa down to Laguna Niguel/Ladera Ranch/Dana Point and of course Irvine as that's where most of buyers are looking to buy.  Also, if and when it comes time for me to get back into the corporate world the central location is a plus because there are so many companies in Irvine and even if I were to work in Orange, Brea, Santa Ana, or even Huntington Beach the drive would be very tolerable.  Lastly, the fact that there is plenty of retail and food options close by (District, Spectrum, Market Place, etc). 

The really funny part that my family and my friends poke fun at me is that even though I own 4 properties, I am a renter and don't live in any of the properties that I own.  The reason for that is because it's more cost effective for me to be a renter of a smaller 1-bedroom apartment than occupying on of my rentals.
 
If I were single... I would live in Irvine too.

Wait... I did. It did suck that back then, most places closed by 9pm, but I wasn't a clubber type and most basketball courts kept their lights on until 10-11pm. Speaking of, I didn't have to worry about someone pulling a gun out during a pick-up game... oh wait... that happened in Irvine too... oh well.
 
I think those numbers are probably accurate, they just don't accurate reflect the people on THIS forum.  In fact its probably going to end up being a little higher, more like 30 or 40% of people won't be home owners.    A lot of people (more and more or so I hear in the media) come out of college with big fat student loans and get first jobs where they make 40k or less for a couple years.  A lot of people will never be able to save up enough for a deposit and a certain percentage of peopel would rather be renters in certain areas than owners in other areas  --  southern california comes to mind in general, but I also know of people who could afford a very nice house inland but prefer to rent an apartment close to the ocean - which they could never afford to buy. 

I mean completely disregarding all the people who are now financially not going to be able to buy for say, 5 or or more years (and then will it make sense for them? maybe maybe not) there have always been plenty of people in this country who are not homeowners either becuase they don't want to  be or can't seem to get their credit or finances in order.    I know al ot of people who get a little more money in their pockets and immediately move up to a bigger or nicer apartment (or they stop sharing a place and get their own), start buying nicer things or eating out more, etc.  I went to hs with one girl who (after college) was barely scraping by on freelance work and living with her parents but she went out and bought an apple computer, a new iphone and the 100/month contract  (back when iphones were first released and cost 400 bucks) and so on.  And she is very happy with it and living in a studio with her boyfriend.    We're all heading towards our 30s but I am financially able to purchase now and her ability to purchase is probably at least 5 years away, IF she starts planning to do so right now instead of planning to expand her business or whatever she's doing right now.    My ex has now upgraded his finances from barely able to stay afloat and (at one point he was only doing so by spending an extra 15 hrs a week scavenging and repairing broken computers and electronics) to  someone who has a tiny emergency fund and doesn't feel pinched and shares an apartment with a friend.    These people might buy when they are say, 35, but then there will be a whole new wave of 28 year olds in their shoes.
 
Must be different times.

I started looking for my first home to buy when I was 23-24. When I finally did make my first purchase, 3 years later, it was on my own income with only 5% down.
 
irvinehomeowner said:
Must be different times.

I started looking for my first home to buy when I was 23-24. When I finally did make my first purchase, 3 years later, it was on my own income with only 5% down.
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That's awesome that you were able to do that. The only people I know who purchased homes young were the ones that had a LOT of help from their parents.

I think of my grandparents, who were already married with kids, plus homeowners, in their early 20s. It seems that people today don't really have their lives together so well at an earlier age. Not because we are lazy, but because there are more educational and social pressures preventing us from being "real" adults at 18. Years ago you could get a decent job with just a high school education, for example, but now you pretty much need at least an undergraduate degree to compete in the job market.


 
 
Well... back then, housing prices weren't so ridiculous so you can afford a small 2br/2ba SFR on a single income and 5% down.

This is probably why all those condos/smaller products are doing so well because those are the only ones you can afford. Although if I compare some of the salaries of entry level jobs now (which are not far off from those back then), you still wouldn't be able to afford these smaller products.

As a point of reference... starter SFRs in Irvine were about $150k, condos were $100k (or less). Prices have tripled/quadrupled since then... but salaries have not. It would be interesting to note what rents have done since then (I'm too lazy to look it up) but I'm sure that a big factor of why people can't buy even if they wanted to.
 
irvinehomeowner said:
Well... back then, housing prices weren't so ridiculous so you can afford a small 2br/2ba SFR on a single income and 5% down.

This is probably why all those condos/smaller products are doing so well because those are the only ones you can afford. Although if I compare some of the salaries of entry level jobs now (which are not far off from those back then), you still wouldn't be able to afford these smaller products.

As a point of reference... starter SFRs in Irvine were about $150k, condos were $100k (or less). Prices have tripled/quadrupled since then... but salaries have not. It would be interesting to note what rents have done since then (I'm too lazy to look it up) but I'm sure that a big factor of why people can't buy even if they wanted to.
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Exactly, I bought my first home (a 3bd/2ba townhome in Huntington Beach) for $114k back in early 1999 in my early 20s.  I put 20% down from some financial aid student loan funds that I put away and saved up money by living at home for 18 months after graduating.  I did a cash-out refi loan in 2003 for a 30-year fixed mortgage at 4.75% and used the proceeds to totally renovate the place and for the downpayment of my Irvine condo.  At the peak it was worth about $450k-$500k but around $325k-$350k today. 
 
I'll say it now.  The new American dream at present is renting.  And there is nothing wrong with that! 
This is driven by the high cost of owning.  In the high end, why in the world would anyone buy when they can rent a high end home for close to half the cost of owning.  Not everyone can play this angle of course.  But the real cost of renting a home that would cost about $6,800 a month to own is roughly $4,000 per month.  This assumes of course that the value of the home is flat which is realistic for at least the next 2 years.  This also assumes that you don't spend your huge downpayment and it is earning 3% interest or dividend income and that you are in the 40% tax bracket. 

It gets really interesting if you then factor in decreasing home values in the high end.  This is reality and the homeowner really takes it in the shorts.  A $600,000 decline in value in one year is $50,000 per MONTH in losses for the owner. But not the renter.  I'm so glad the owner is subsidizing my lifestyle while I live in his deluxe OC beach home!  I'll enjoy it while it lasts! Then I'll buy.
 
bluemove said:
I'll say it now.  The new American dream at present is renting.  And there is nothing wrong with that! 
This is driven by the high cost of owning.  In the high end, why in the world would anyone buy when they can rent a high end home for close to half the cost of owning.
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That's why it's called the american "dream", it's harder to attain.  Anyone can rent.

 
irvinehomeowner said:
Well... back then, housing prices weren't so ridiculous so you can afford a small 2br/2ba SFR on a single income and 5% down.

This is probably why all those condos/smaller products are doing so well because those are the only ones you can afford. Although if I compare some of the salaries of entry level jobs now (which are not far off from those back then), you still wouldn't be able to afford these smaller products.

As a point of reference... starter SFRs in Irvine were about $150k, condos were $100k (or less). Prices have tripled/quadrupled since then... but salaries have not. It would be interesting to note what rents have done since then (I'm too lazy to look it up) but I'm sure that a big factor of why people can't buy even if they wanted to.
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Yeah those days are gone.  My parents bought their house in 1996 (lovely house on a huge lot in HB - the 92646 part) for like 310k.  Their previous home in HB which was probably more in the 'starter' home range was probably sold for around 260k.    My boyfriend and I would have no problem affording 310k.    And either of us could afford a townhouse or condo at those prices on our own salary.    But now a crappy townhouse in HB (say the Huntington Continentals on Adams behind the kohls, with the craptacular parking and tiny cramped layouts) is 250k.  He could probably solo afford that, but it would be uncomfortable, and I certainly couldn't.  I mean speaking of starting salaries, the average starting salary among my friends with non technical degrees was about 38k.  I  did a little better at 40k.  My boyfriend with his computer science degree got in at a whopping 45k (it was a startup, but no one else was even hiring at the time).    And most people come out of college at 23 with at least a small student loan - some people come out of college later or with HUGE student loans.

And then there is the additional aspect that people straight out of college are used to living with roomates.  Why choose to purchase an unbelievably crappy and risky 150k condo when you could rent a much nicer 2 br with a roomate for less?  I mean sure my bf and I could afford (by being Dual Income No Kids) to go buy an ok place, and if we went closer to the limits of our affordability we could afford to buy a place we really liked, but for the monthly price of the OK place we have an awesome apartment that we really like, in a location we like better than where we could probably afford to buy (not actually easy to compare for sure though, the area we are in is mostly 600k+ SFRs or apartments, not a lot in between).

Things will either equalize (prices come down to where people are buying) or they will stretch and scrimp like crazy for several years (and contine to be dual income) to try and afford to buy.    Right now I still see plenty of people doing the latter, but I think the generation that is about 10-15 years younger is going to remember their parents being stressed about their home payments or their foreclosures....they may feel very differently about home ownership than we do.
 
For me, it's huge.

I'm a recent owner; been in my house for a month. I rented for the past 10+ years and never really considered the financial benefits:

1. Instead for paying for someone else's investment, I'm paying for my own.

2. Tax benefits, tax benefits, tax benefits

3. My mortgage+HOA payment is lower than my most recent rent payment.

I bought in a depressed area/market and got a damn good deal. I'm positive that if and when I sell I'll get a very healthy chunk of change in my pocket.

My initial offer was $40K below asking. The sellers countered for an extra $15K, which I accepted, but my Realtor added a stipulation that if the house appraised for lower than the agreed purchase price, then I would get the home for the appraisal price. If the sellers did not agree, they would have to reimburse me for the appraisal.

The home appraised for $30K less than the purchase price. The seller took a week to make a decision and finally agreed to accept the appraisal price.

I also got a killer mortgage rate and qualified for the state tax break (if I had only fallen into that Federal/State window, I could have gotten the full $18K, natch).

Overall, I got an amazing deal and my patience paid off; I had been in the housing market for 1 1/2 years.

Other than the financial benefits, I like coming home to something that I own. I can do whatever I want to the house and I don't have to ask permission. I am the master of my own domain. It's a really good feeling, and I highly recommend it to anyone who is thinking about buying. Good luck to all!
 
jumpcut said:
Congrats, OKkid...can I ask what area you bought in?
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Thanks JC. I purchased in Corona. I work in Irvine, but the drive isn't that bad; I live a mile away from the toll road and I telecommute 1 day a week. It's a lot better than my commute from South OC. After 3 years of literally sitting on the 5 and 405, the toll road is a pleasure.
 
OKkid said:
My initial offer was $40K below asking. The sellers countered for an extra $15K, which I accepted, but my Realtor added a stipulation that if the house appraised for lower than the agreed purchase price, then I would get the home for the appraisal price. If the sellers did not agree, they would have to reimburse me for the appraisal.
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Man this is super awesome - I imagine there are a lot of relatively delusional sellers out there who think there is no way their house is worth less.  Everyone should have this clause.  I mean obviously the seller has to be desperate enough, but if you can find someone that is it might work out.

I personally still consider corona way too far, but I  know other people don't.  I also consider most of south county way too far (not miles wise but that traffic is terrible).  I'm pretty much super spoiled by my 10-15 minute commute. I never want to give up my 10 minute commute.    There certainly are deals to be had if you are willing to go out there though.    (also its hot there. ew)
 
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