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In case your pocket doesn’t feel fully picked by college costs, graduate school, wages that don't keep pace with inflation or that crappy service sector job, there is always the roof over your head to worry about.  And when it comes to real estate, today’s young kossacks under 35 are swimming against the tide--of lemmings.

Young Kossacks are at a distinct disadvantage when it comes to real estate.   We already start out with high levels of student debt and a decreasing return on those degrees facing jobs that, adjusted for inflation, mean "...a typical household's income is lower today than it was in 2000."

All in the face of escalating home prices that have increased 50% over the past five years nationally, and considerably more in many coastal markets.

Which leaves many of us renting, many of us trying to buy, and maybe even a few of us in a little over our heads, wondering how, exactly, are we suppossed to live?

Housing Affordability
Affordability used to mean keeping your housing expenses to 28% of your income—40% was considered the cut off by many. But even owning a mobile home these days can blow that statistic out of the water and there are a great number of families approaching the 50-60% mark.  In many cities and especially coastal areas, housing that meets 40%--let alone 28%--is nonexistent.  

Housing costs have so exceeded what people can actually afford that the traditional lending industry has given way to the subprime market, with 20% down payments gone the way of the dodo.  What has enabled people to buy despite housing affordability hitting an all time low in 2005?

A bevy of toxic financing:

Any of these sound familiar?  

No Money Down

Adjustable Rate Mortgage

Interest Only

Negatively Amortizing

Pre-Payment penalty

No Doc Loan

These loan options were very popular because they helped people get into homes that they otherwise couldn't afford.  

The Washington Post

About 26 percent of mortgage loan originations by dollar volume in the first six months of 2006 were interest-only loans, according to the Mortgage Bankers Association, a trade group in the District. Such loans do not require borrowers to pay down the principal.  

Another 13 percent were "option" adjustable-rate loans, which allow customers to pick their payment amount, including a low-cost choice that covers neither the full interest nor the principal.

In comparison, in the last six months of 2005, 25 percent of mortgages were interest-only and 8 percent were option products. Until 2000, less than 2 percent of consumers had interest-only or similar loans.

All of these were intended to address specific and rare instances and offer exceptions to the usual mortgage process for those who were self employed or in unusual circumstances.  Instead, they have become the primary vehicles for addressing housing inaffordability.  And they certainly were never intended to be rolled in together.

Now that housing price appreciation has stalled, the number of ARMs has fallen off and a number of subprime lenders are closing shop and going out of business.

High housing prices have led us to redefine affordability.  Like the other big ramp up taking place in consumer debt, it is less about what you can afford than about what you want.  It’s whatever you can squeeze into with a combination of no money down, interest only, no doc, adjustable rate you-name-it suicide loan.  

But as everyone moved from the tech bust to the housing bubble, we were told to cobble them together or forever be priced out.  Yet as the market is turning, with sales stalled, prices stagnating or dropping and sites like Ben Johnson’s The Housing Bubble Blog or the self-indulgent Iamfacingforeclosure.com usurping more of our time, some of the conventional wisdom is beginning to shift, too.

Which leads us to address the topic at hand: what can young Kossacks do?

Go Ahead, Throw Your Money Away on Rent!

Or is it throwing money away?...

With today’s high housing prices and record low levels of affordability, that ubiquitous maxim may no longer on its surface be true.  Where I live in Los Angeles, a nice one bedroom apartment rents for $1200-$1400, a two bedroom for $1700-$2300.  The cheapest condo in this area sells for $529,500, which with a $105,900 down payment would mean $2,564 a month.  With a $52,000 downpayment, monthly mortgage costs would come to 2,890, plus Home Owner Association fees.  Buying that condo with no money down is going to raise your payment to $3,205, though you will probably pay for that with a suicide loan.  

Which means buying costs me 1 ½ time more a month than renting.  Oh, and don’t forget to add:

a) 2 to 5 percent of the purchase price in closing costs

b) Maintenance/upkeep

c) Property Taxes

d) other miscellaneous expenses

This has led a lot of young people to choose to sit out for the time being:

"For someone like me who makes decent money, I could afford a condo right now, but then I'd be house-poor," he said. "I plan on buying as soon as prices go down."

You may not be building equity, but in a period of stalling or declining prices, if you can keep your monthly rental expenses to a minimum, you can pocket the sizeable difference and be socking it away for that old vestige of real estate past: the down payment.  

Of course, this means that rental vacancies are starting to drop as well.  Los Angeles is currently at 1%, which means selection is low and prices are rising. Of course, a lot of those speculators are converting condos to apartments and offering their "investments" as rentals.  But be careful if you rent a listed house--if they sell or foreclose, your lease is gone unless the building continues to function as an apartment complex.

Drive Until You Can Afford It  

Oftentimes, you can try moving a short distance away to afford housing.  The problem is that as more people are faced with this option, you have to move increasingly further off the beaten track-- and you will pay for it in time commuting, gas, and wear and tear on your vehicle.

In the Los Angeles area, you need to move about 45 minutes out to see any noticeable drop off in pricing.  Realize that is an hour and a half per day that you are driving to work, or 7 hours per week.  Now, I want you to do something painful.  Take your weekly salary and divide by the number of hours you work.  Is it 40? I hope so, but I doubt it; it's probably more than that.  Now, add in the extra 7 hours a week you would be driving to and from work and do the same thing.  Examine how much you reduce your hourly pay--because you are essentially working for less money.

You also need to be careful that where you buy is attractive enough that if prices decline people will still want to live there.  

Buddy Up

Still stuck between a rock and a hard place?  Try moving in with more than just one roommate.  Especially in city centers, prices go down as you rent a three-bedroom instead or a one- or two-bedroom.  And with more roommates you will save money on utilities.  

Buying with friends can be tricky--what if one of you wants to move or gets married?  Splitting up a property can be tricky since real estate is not a liquid asset.  But I know several people who have bought and brought friends in as roommates.

Do Whatever it takes!  Damn the rent to own ratio!

Fine.  But please, Only Buy if You are Going to Stay Put. Rates are at historic lows and if you can afford to get into something that you want to live in and make your home, buying now could work for you.  

And for those of us who still rent?  Well, my best advice is to keep saving (or paying down debt), pocket the difference and wait to see how the market will play out over the next two years.

If any under-35 Kossacks currently own a home or condo, please share your experiences and advice in the comments!

And best of luck to us all!

Originally posted to theKK on Thu Jan 25, 2007 at 06:03 PM PST.

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Comment Preferences

    •  Thanks for keeping the topic alive (2+ / 0-)

      Quite timely, too: There's a Public Radio show (PRI) on "utopias" this evening, including a segment with Geoph Kozeny, producer of the "Visions of Utopia" video on modern and historical alternative communities:

      Tonight Thurs Jan 25, 2007
      7-8 PM Eastern [and rebroadcast at lots of different times, check  
      your local station on the list]

      The History of Utopia
      on "Open Source" with Christopher Lydon
      Public Radio International

      http://www.radioopensource.org/...

      •  All young people need to investigate co-housing (1+ / 0-)
        Recommended by:
        raines

        and intentional communities. http://www.cohousing.com although the home site is very middle class. For more adventurous ones check out intentional communities of which there are about 3000 in the US. All different kinds with all different emphases. Dancing Rabbit north of Columbia Missouri is focussed on environmental design and eliminating footprints.

        East Wind in Tecumseh Missouri is very eclectic and has become a multi million dollar enterprise as their nut butter business has taken off beyond anyone's imagining. No one envisioned this at all.

        Wisconsin has some wonderful ones. And there are many more. It is a wonderful free way to raise your children. You have no idea how different these chidren are. How self confident, how smart, how unfull of bullshit. They have grown up safe and free.

    •  I'm 34 (6+ / 0-)

      I bought a condo 9 1/2 years ago in western CT near the major highway (I-84) because it allowed me to get to NJ that much quicker to visit the parents.  Plus I worked in that part of town.  I could literally ride my bike to work.  I was young, single and making decent money then.    

      10 years ago 1 bedroom condos were going for under $100,000 (I paid $88,500).  My parents gifted me $10,000 (they're allowed to gift $12,000 now per parent tax free) which I used as a down payment and I paid the closing costs.  At the time I was renting and paying about $600 for a 1 bedroom apartment.  I was paying under $600 for the 1 bedroom condo plus about $100 in common charges so in essence I was paying a bit more and getting all the benefits of ownership and I was right by the pool!!!  At some point I pulled a 2nd mortgage and put in HW floors and replaced the windows and sliding door).

      A little over 4 years ago I and my then girlfriend had a son and facing a space crunch I took the next step.  Single family homes were a bit too pricey so I bought a 2 family home instead.  When factoring the rent from one unit plus the rent I would get for the condo I was able to afford more.  My parents gifted me $20,000 ($10,000 per parent) which I used as a down payment and I paid the closing costs. By then I had a real estate license so I was able to represent myself and save on brokerage fees.  Also through my real estate connections I was able to get good tenants for one of the units and the condo (they were my clients and I was helping them find a place to rent).I rented the condo out for $1,250 a month which more than paid for the 2 mortgages and common charges with some extra to boot.  The remaining rent from the condo with the rent from the one unit covered close to half of the mortgage on the 2 family house.

      For a few years it was tough paying the bills.  Real Estate was spotty and my full time job wasn't steady.  Eventually I was able to refinance the condo, get rid of the second mortgage, shave 5 years off and get a new car all the while keeping the mortgage with common charges lower than whan I'm getting in rent.  

      I also refinanced the 2 family, shaved off 8 years and am now paying less in mortgage than I was before.

      My next step is to buy either land or a crummy house I can fix up or tear down and start from scratch.  If you have the time, connections (which I do thanks to working in the real estate field) and patience it is alot more affordable to build your own house than to buy one.  If you do it right you can save up to a third of the cost of a new house.  Right now I'm holding steady and getting everything in order to buy some land.  The market is softening but not enough.

      It certainly helps having parents who can gift you $30,000 over time but I was also very lucky (or smart, depending on how you look at it).  I bought at the right time, I bought in the right place, and due to Bush's economy I was able to refinance at much lower (2 points in both cases) which freed up alot of money.  I have well over 50% equity in both properties which I can use to take the next step thanks to the drastic appreciation of homes the last 4 years.  Like I said, I was lucky.

      Anyway, that's my story, I'm sticking to it.  

      •  Landlord-ing (3+ / 0-)
        Recommended by:
        sarahnity, dennisl, jetskreemr

        Any tips about being a landlord? You have a leg up being a real estate agent.

        I know that eviction varies -- in NYC, the law favors the renter, in Texas, the law favors the landlord. (Shock.)

        If anyone here wants to consider renting out a room, floor, half of house, or whole place, what do you suggest? Also, any tips on how to sublet your own place while you're away?

        •  It ain't easy, but it's doable (2+ / 0-)
          Recommended by:
          jetskreemr, kath25

          If you are contemplating doing this (and I think it's a really good approach for some first time home buyers) first educate yourself about the local laws.  Not only is every jurisdiction different, but the laws that apply to renting a room in your house can be very different than renting a standalone apartment.  I would start with the Nolo Press book on Landlords and Tenants (not a bad book to look at if you are a tenant, as well, so that you understand your rights and responsibilities).  

          Also, you should be able to take care of at least simple maintenace and repair tasks yourself.  If you have to pay for a plumber to come out every time you have a clogged toilet, you will quickly eat into your profit margin.  The real key is to find a good tenant and that is at least 50% luck.  You would not believe the trouble a bad tenant can cause.  Similarly, a good tenant can be a amazing blessing.

          •  Speaking of plumbing problems (3+ / 0-)
            Recommended by:
            abbeysbooks, jetskreemr, kath25

            I thought I'd pass on something that just saved my mother-in-law a ton of money and trouble.  The main sewer line from her house backed up (a not uncommon experience in older houses) and it turns out that in our town, the city will come out and rout out the sewer line for free.  They figure that in cases like this it is often due to the roots from the street trees, so they think it's their problem.  Even though she has no street trees, they were there within an hour of her call and never charged her anything.  

            Ironically, she only called the city as a last resort because she couldn't get a plumber to show up that same day.  So, if your whole house plumbing backs up, call the city first, who knows you may live in a lucky town.

        •  I've been looking into this lately (2+ / 0-)
          Recommended by:
          sarahnity, kath25

          I'm 34 and own a 3-bedroom single family home with my husband. We have been reading and researching a number of outlets lately on purchasing extra real estate as an an investment, so here are some things we found out.

          We found one common theme everywhere we have looked: the hands down best investment/place to live you can get is using OPM (other people's money). So, buying a duplex or quad-plex, living in one part of it and renting out the other part(s), is the best thing you could possibly do. The renter(s) pay a large chunk of your mortgage, and you pay an average rent, but you are building equity on top of it all! Go to a mortgage broker if a normal bank won't lend you the money (mortgage brokers accept more high-risk, low-income buyers. You may pay a higher interest rate, but odds are, your tenants will pay for that too.)

          Yes, through all of this you will be a landlord, but there are outlets and services for this too. I am definitely not a handy-person, but I found a friend who is. There are also management companies you can hire for a small percentage of the rent to handle the day-to-day issues of the tenants. There are so many outlets for landlords, it makes so much sense to look into it and have other people pay your mortgage! Look at the library or Barnes + Noble about landlords, renting, real estate investments, etc. You will be amazed at what you find!

          Those who can make you believe absurdities can make you commit atrocities. -- Voltaire

          by jetskreemr on Thu Jan 25, 2007 at 08:01:50 PM PST

          [ Parent ]

          •  Mortgage vs bank (3+ / 0-)
            Recommended by:
            abbeysbooks, jetskreemr, kath25

            Banks will charge you a half a point more for a 2 family than what they charge for a single family.  At least my bank does.  they're a bit tougher than mortgage companies but if you can go the traditional bank route I strongly suggest it.  Mortgage companies almost always tack on extra charges, points and fees.

            Keep in mind that the rent will coulnt towards your income for mortgage purposes.  When I bought the 2 family they took 75% of the potential rent and applied it to my income.  So if you make $3000 gross a month and you can get $1000 in rent your monthly income is $3750 ($3000 + 75% of $1000).

            Managing companies are a good route if you have more than a few  units or if you're not handy at all.  It's worry free.  Of course if you're handy or have alot of free time I suggest doing it yourself.  In the end you'll be basically paying yourself what you would be paying the managing company.  

            •  you often have to take the rental income as 1099 (1+ / 0-)
              Recommended by:
              kath25

              Which means you pay both the employee and the employers portion of the social security tax (something like 15%)

              I think the only way around that is to incorporate or run an LLC etc, but that requires additional costs and time as well.  But the rental income is definitely taxed and not straight across when calculating what you can afford.

              You also have to consider whether you have enough cash on hand that if you had a renter skip out or even had to go a few months between leases that you could carry the place. Your renter may sign a 12 month, then go month to month and decide to move in a month when no one wants to rent, like Nov or Jan.  

              •  Good points (1+ / 0-)
                Recommended by:
                kath25

                Also incorporating as an LLC adds a layer of protection.  

                Two months cushion minimum is a pretty good rule of thumb.  You should always have AT LEAST two months rent tucked away just in case.

                Another thing to consider is repairs.  If the place is in good shape then you're okay.  However, if you know you need a roof in a few years then you should price it out and put a portion away a month to pay for it when needed.  For example, if you know you will need a roof in 10 years or so and it costs $15,000 to replace then you should be setting aside $125 a month.  Same goes for water heaters, appliances, carpeting and so on.  

            •  You can also advertise for a mortgage (1+ / 0-)
              Recommended by:
              raines

              and state your terms and conditions offering a % of return on their money backed by your real estate. It's a win win deal. People have cash they would like to get interest on that would be higher than a bank CD but still be safe, and a house would be excellent collateral.

        •  Tips (3+ / 0-)
          Recommended by:
          sarahnity, jetskreemr, kath25

          I'm actually an appraiser with a real estate license as well.  

          Always do a credit check.  That's a given.  

          Also I usually go through the real estate office to get renters.  I've been lucky since the usual clients walking into real estate offices tend to be professional in my parts.  You end up paying 1 month rent in commission but you get someone almost immediately and they do a credit check for you.

          Always get a lease signed.  If you have it on paper it makes your life easier.  Always try to get 1 year and I usually get 2 months deposit which by law you have to keep in a separate account.  At the end of the lease you have to obviously return the money plus interest.  Always take photos prior to renter entering the unit.  That way you have proof of the condition when you rented it.  

          Also, if you can, rent out to corporations.  I rented out my condo to a semi professional hockey team and never had to worry about the rent.  Heck I even got free tickets.  Unfortunately the owner was arrested for racketeering and the team folded so I didn't get to rent to them again but that's another story.

          Evictions in CT are tough on the landlords which is why it's very important that you are careful.  I was lucky.  I rented to a professional who commuted to NY.  In 3 years I never had a problem.  I rented to a corporation and never had a problem.  Heck I even rented out to Equadorians, only 1 of which was here legally and didn't have problems (I suggest against it though unless you live in the same building and know them).  Heck the only time I had a problem was renting to a friend of a friend.  Whatever you do, don't make that mistake.

          Also, if you're handy it helps.  You save alot of money by doing alot of the work yourself.  If you're not handy be sure to have friends who can do odd jobs for you.  A good source of cheap labor (aside from illegals) is the local vocational technical school.  I got a friend who went to one to do some electrical work for me he got a kid from the school to help him out.  I ended up paying a fraction of what electricians charge both to my friend who is licensed and to the kid who is an apprentice and needs the experience.

          Subletting while you're away is tricky.  Again, I suggest real estate agents to help you get tenants and keep on top of it while you're gone.  It'll cost you a bit but it's less of a headache.

          Renting rooms is tough because most of the people who rent them out are transients and could be here today but gone tomorrow and don't really care.  If you have a college near you then that could be a good source of short term renters jusy looking for a place to crash on the ocassional night.

          Renting homes can also be tough unless you hook up with a corporation who will lease the place out from you for relocaters.  If you furnish the place you could even get more coin for it.  The trick is to get hooked up with a few corporations in your area who are always relocating people.  That way you'll always be in the loop and have plenty of potential renters plus a guaranteed check.

          I'm not gonna lie, being a landlord isn't easy.  there have been plenty of times where I had to unclog a clogged toilet and left smelling like well, let's just say I didn't smell like roses.  But with prices being sky high on single family homes, buying a 2 family is not a bad way to go.  You build up some equity and have some extra income which will make it easier to move up a few years later.

          •  landlords (2+ / 0-)
            Recommended by:
            sarahnity, kath25

            I have a friend who's a realtor. He says the standard is if somebody stayed in their previous place for 3 yrs, chances are that they're good tenants. Also you can put in the lease that they're responsible for relatively minor stuff and put in a monetary value - $50-$100 - essentially what a plumber in your town would charge you for a very basic charge. This usually cuts down on the tenant calling you for every little thing. If you're going to buy a duplex, you will be living next door so it shouldn't be a big deal to do some minor work. We had a rental where the idiot tenant broke the both doors and pretty much every single window screen because they kept on forgetting their keys and would break into the house because god forbid they should go to Home Depot and pay out $1.50 for an extra key.  The nice thing about living in a duplex is that chances are that you yourself are going to know the shape of the whole place and hopefully keep it up.  

            •  Absolutely (1+ / 0-)
              Recommended by:
              sarahnity

              Living in the same house definately cuts down on taht kind of stuff.  

              I put in my leases that the interest earned on the deposit will be retained by me for paint and cleaning upon the tenant leaving.  The thing about leases is that you really can alter it to suit your needs.  Trick is to know what is okay and what is excessive in your market.  You're basically negotiating with the tenant but if you put too many demands you could drive away some people.  For example, by me asking for 2 months I realize I drive away some people but I also am more certain that I'm getting someone who can afford to pay the monthly rent.

      •  You are after my own heart. (0+ / 0-)

        This is what I have been doing since 1974. I told a student in the first class one summer about buying quadruplexes. He was Jamaican and working as an orderly in a hospital in Philly. That was Friday. The next Monday morning he came to class and said he had bought a quad over the weekend. He was off and running and is now a big player.

  •  Thanks, TheKK! (6+ / 0-)

    For this informative and important diary.

    If anyone is interested in joining the mailing list, please email kossacksunder35 at gmail.

  •  it'll be a good 9 years before I turn 35 (10+ / 0-)

    hopefully, in this market, I'll be able to afford a shack of some sort by then...

    Republicans: By their rotted fruit you shall know them.

    by thereisnospoon on Thu Jan 25, 2007 at 06:08:39 PM PST

  •  i'll rent forever (10+ / 0-)

    or until i can afford to buy a house and see it lose value. i like renting because i'm not really rooted at this point. (although i have a feeling i will end up where i am living for the rest of my life because i just love it so, but who knows?) i don't want to buy and count on the property appreciating. plus, as you point out, all those extra costs, PLUS home maintenance and repair, of which I want no part? No thanks, I'll be a silly renter throwing away my money. A lot less stressful and that's what I'm all about.

    "I'm also not very analytical. You know I don't spend a lot of time thinking about myself, about why I do things."

    by missreporter on Thu Jan 25, 2007 at 06:09:13 PM PST

    •  I know, my garbage disposal broke (7+ / 0-)

      and I realized, I have no idea how to fix it that doesn't involve a crowbar.  I just called my landlord....

      •  Good point. (3+ / 0-)

        I had a pair of friends who wanted to buy a house, no money down, ARM. They visited the house, and the seller had the serve to suggest that the buyers would have to put a new roof on it. The young buyers were thankfully deterred.

        It's a problem, though. You need to know a plumber, electrician, handyman, because some stuff you can't do yourself. Websites and the community diaries here are a help on some stuff, but you can't pump your own septic tank.

        •  true. homeownership can be a lot of work. (7+ / 0-)

          But it also played a very important and stabilizing role.  The trends worry me; because it used to be that you bought a house and paid it off before you retired so you could live off your fixed income or savings.

          It seems actually paying off your mortgage is becoming rarer--as more people cash out to finance investments or make ends meet because their salaries can't.  

          And the younger generation is getting a later and later start.  What is this going to do to us as a society?  Especially when you compound it on top of all the credit card debt, a negative savings rate, low retirement savings and a lack of health insurance for so many?

          •  No idea (1+ / 0-)
            Recommended by:
            kath25

            my parents just paid off their house a few months ago.  They are thrilled!  They of course bought it for less than $100k in 1980 and then took out a second mortgage to pay for an addition.  Still, they are now done with mortgage payments and it is sad that it is so rare.  All of those people with the crazy mortgages will never have that happen.

            •  Mine too. (2+ / 0-)
              Recommended by:
              sarahnity, OrangeClouds115

              30-some year mortgage. Never refinanced, because the low payments helped them save for retirement and the kid's education.

              Similarly, I have no expectation of ever paying off a mortgage if things continue the way they are. That's if I ever even buy a place.

              •  don't rush into it (5+ / 0-)

                I got screwed. I'm going to lose $10k on my place, minimum. It's the last thing any of us wants or needs. If you get laid off your job and you are renting, that's bad. If you get laid off and you own, that's worse. My entire unemployment check goes to pay off my mortgage, leaving nothing else for me. I'm not living lavishly right now, but I'm burning through my savings to pay my damn mortgage.

                Recipe For America - A people-powered movement to take back our food system

                by OrangeClouds115 on Thu Jan 25, 2007 at 06:49:46 PM PST

                [ Parent ]

                •  I know this will make you cringe (1+ / 0-)
                  Recommended by:
                  OrangeClouds115

                  but you could do a medical study now and again to keep up. Lots of them in California and Arizona. If you're cautious just do generics. If adventurous then try investigational drugs. I've only had trouble once in feeling really bad and that was an anti depressant combined with urinary incontinence at Lilly. It paid about $4500 and I got to stay there in a hotel environment. Own room, own TV, compupter,movies. Right across from IUPPI campus, their library, classes etc. It helped.

                  •  not a bad idea at all (1+ / 0-)
                    Recommended by:
                    abbeysbooks

                    I'll keep my eye out for something.

                    Recipe For America - A people-powered movement to take back our food system

                    by OrangeClouds115 on Thu Jan 25, 2007 at 11:13:42 PM PST

                    [ Parent ]

                    •  Don't keep your eye out (1+ / 0-)
                      Recommended by:
                      OrangeClouds115

                      email me and tell me how far you will go for a study. My first ones I went greyhound because I didn't have a reliable car. I'll give you the names, addresses and phone numbers of the facilities. Or better the web sites and advice as to how to do it without shooting yourself in the foot as everybody does sometime or other and gets disqualified from some place or study.

                      I know you just went to CA but forget where you live. You are a writer right?

                      I am at abbeysbooksatyahoodotcom

              •  mine paid theirs off too and they were (4+ / 0-)

                the only people I knew at the time who had.

                My mom laughed and told me about a call they got offering to refinance her mortgage at a lower rate. She told them she didn't HAVE a mortgage.  There was silence on the other end--they prolly didn't even train their sales reps for that contingency.

          •  Neo-feudalism (0+ / 0-)

            Draw out the trends you observe to their logical conclusions.

            I'm not part of a redneck agenda - Green Day

            by eugene on Thu Jan 25, 2007 at 10:33:48 PM PST

            [ Parent ]

        •  If you live near an Amish community they do all (0+ / 0-)

          this kind of work. Not electrical tho. Here they are about 10 an hour but they do good work and don't try to cheat you.

      •  omg for the brief period (6+ / 0-)

        I lived in a condo I owned, I was SO HELPLESS about stuff like that. Once my garage door broke. I had no idea what to do. Eventually I got a friend to come fix it in return for a home made dinner. Phew!

        Recipe For America - A people-powered movement to take back our food system

        by OrangeClouds115 on Thu Jan 25, 2007 at 06:47:48 PM PST

        [ Parent ]

        •  Trade and Barter! (2+ / 0-)
          Recommended by:
          OrangeClouds115, kath25

          I'm just glad you didn't start parking on the street....stupid garage door!

          •  I did for a little while... (3+ / 0-)
            Recommended by:
            theKK, abbeysbooks, kath25

            I tried to get the same friend to change my lightbulbs too (he had a tall ladder to reach the ones in the foyer) and if I had stayed there, maybe I would have had him hang my pictures up too. I put all kinds of holes in my apt that I had before I moved into the condo, and I learned from that experience that I am not very good at even hanging pictures up.

            Recipe For America - A people-powered movement to take back our food system

            by OrangeClouds115 on Thu Jan 25, 2007 at 07:08:06 PM PST

            [ Parent ]

            •  I started learning all this stuff (1+ / 0-)
              Recommended by:
              OrangeClouds115

              when I was fifty. Feminism helped as it made me feel powerful to come in and fix a toilet in 20 minutes or so while the guy stood there and watched. So I know how to do these things and I know how they should be done which is very important. I'm not afraid.

              So when I went to the grocery store in late fall 03 and passed a victorian storefront just off the square in my town and saw a rent/buy sign in the window I called just out of curiosity. The following weekend the owner showed it to me and it had an apt upstairs and a huge commercial elevator going to the third floor unfinished loft. Since I had had buildings like this in Philly I wasn't scared. I ended up getting it with$100 down and $400 a month with half going for the down payment for one year. Now how could I turn that down? So here I am.

              And I am getting ready to take on another big one and cohouse it into 3 units:commercial storefront, huge beautiful sunny upstairs apt needing renovation, and a studio in the back.

              Anyone interested? I can get it for $50K cash or get her to hold the mortgage. I am pondering this one. What I want is to move my bookstore into the storefront and anyone else can use it too. Cafe? Restaurant? Art gallery? Whatever? I no longer want to be a real estate maven. I want cohousing so I can live around people who are into that kind of thing.

              No smokers.  

    •  I Feel Similiarly (5+ / 0-)

      I will rent till I am settled in an area and prices go down.  I'll keep saving and trying to pay off my other debts so that hopefully I can afford the payment on a mortgage for the type of place I like.

    •  I've been thinking about buying a house (4+ / 0-)
      Recommended by:
      theran, abbeysbooks, YoyogiBear, kath25

      where I live in the Midwest you can find a really decent house for $50,000 (And I think that housing here is expensive compared to my hometown where you can get something livable for $35,000.)

      The thing is that houses aren't selling. So if I buy a house, it might take a year or two to sell it.  So as much as I'd like to buy a house, I'm not going to because I'm concerned that I'd end up with something I can't sell.  

      It's strange because a year ago I was working at a shity, but fairly well paying job thinking about setting down.  Then I was able to return to grad school, and know I'm far happier, but making far less.  I'm 26, but still I just feel that I'm at a point in my life when I don't want to live in an apartment where I have to tell the maintenance staff to call the exterminator to kill the cockroaches.

      •  yeah, there are plenty of negatives to renting. (1+ / 0-)
        Recommended by:
        kath25

        My landlord thinks her job is to cash checks.  I had a moldy hole in my ceiling for six weeks and she is so cheap she had the guy spackle over it, only to have to rip it out when it leaked again 2 weeks later.  

        But I do love it when she drives up in her BMW 700 series to haul the trashcans her tenants leave in the street to the back of the house.  Is that wrong?

        •  Broken toilet for a week. (1+ / 0-)
          Recommended by:
          abbeysbooks

          Because it was last fixed -- the flusher mechanism in the tank -- with a paper clip. I had to ask for 5 days before the repairman came to fix it. The repairman is on site every day.

          Grr! And I haven't been able to keep the plastic bottle of water in the tank to save water in the meantime. Though I guess the toilet was being flushed a lot less, so it evens out.

          •  i have a (2+ / 0-)
            Recommended by:
            abbeysbooks, kath25

            lovely stopped up sink with some narsty black water in it.  landlord is coming tomorrow morning to check it out.  its hella gross

            •  Age (2+ / 0-)
              Recommended by:
              abbeysbooks, YoyogiBear

              My apt. complex is relatively old for the area, so some stuff is falling apart. The management has been pretty good about fixing it up, because there's competition with other apartment buildings in the area.

              My boyfriend, OTOH, lives outside of Dallas in a brand new apt. building, and the construction is totally shoddy. There is a light in the main hallway full of water that leaked from the ceiling. It feels cheap, like it was built in 10 minutes.

              It was built on a landfill! Our guess is that it was supposed to be condos and didn't sell, so now it's cheap-ish rentals.

            •  Rubber plunger and some kind of drano. (0+ / 0-)

              Be sure to be careful what you use on metal or plastic pipes so read the directions. Actualy I pour Clorax down mine.

          •  They are pretty easy to fix. Get the parts (0+ / 0-)

            in the hardware store altho the thrifts have them sometimes and I get them when I see them. Takes just a few minutes. Keep the slip and make one up for labor and take it off your rent and enclose copies of what it cost you. Put Jim or someone's name on the labor slip. The landlord will be happy s/he didn't get bothered and not hassle you.

            When you are somewhere take the lid off the toilet and see what it looks like. Play with it a little so you can see how it works. Then you can do it. It's like a puzzle only real.

            In the 1970's China had their kindergarten children packing light bulbs in one of those boxes with compartments. Doing silly labor stuff. It was very like doing play stuff with toys only it was real and they felt like they were doing something important. Nice idea. Same with toilets.

        •  I'd cut them some slack (2+ / 0-)
          Recommended by:
          abbeysbooks, kath25

          if it weren't for the fact that is a major corporation with housing near colleges across the country.  What the did to me, having me move in even though the place was still infested with cockroaches, and not even telling me about it, was highly illegal.  They fucked around for a month in the complex ofice, and I finally emailed their national headquarters with the relevant sections of city code and the associated fines with those violations.  If I had pushed the matter they would have owed the city over $100K.  After that they follow through when I talk to them.

          Still moving out though.  The place is too damned expensive.  About $300 more than comparable places once you figure in what's included.  I pay trash/sewer/water.  Such bullshit.

          I'm going to move to the downtown area.  It's cheap, and I like the older archeticture.  And after living in my brother's neighorhood (a very nice place, but next to some of the roughest neighborhoods in Indy.) I have a high threshold for fucked up.  So long as no one is trying to rob or shoot me, I don't care.

      •  $50,000 (1+ / 0-)
        Recommended by:
        abbeysbooks

        is shockingly low to me.

        Here, you are lucky to find a decent one-bedroom condo or co-op for $200K. A decent house in a decent area is at least $350K. My newlywed friends in Westchester County just bought their first house - no basement, no attic, no garage, barely a backyard, pretty small - and pay a monthly mortgage of more than $4,000.

        "I'm also not very analytical. You know I don't spend a lot of time thinking about myself, about why I do things."

        by missreporter on Thu Jan 25, 2007 at 09:24:31 PM PST

        [ Parent ]

      •  Get Pest Offense for the roaches. (0+ / 0-)

        It's supposed to be for mice but it works for insects too. You plug it in the elec socket. It's not one of those electronic things that don't work. It sets up a vibrtion in the wires that mice don't like. Of course my cats are not happy about the elimination of the mice.  Don't know what it does to insects but it does.

    •  I understand your feeling and think people need (4+ / 0-)
      Recommended by:
      fnb, sarahnity, theKK, kath25

      to think about what their goals are.  Renting is the right choice for some people.

      But renting forever does seem kind of risky to me.  Unless you know you're going to have enough money X years from now, when you retire, having to pay rent every month could become quite a burden on you.

      If you own a house on the other hand, it may very well be paid off by that time which means  you basically pay taxes & maintenance.

      I don't know... how many 80 year old renters have you met who weren't struggling financially?

      •  i exaggerate (1+ / 0-)
        Recommended by:
        abbeysbooks

        i will buy one day.

        however, my parents didn't own their first home until they were in their 50s. They grew up in New York City so it was apartment life their whole marriage, and pretty much all of my childhood. They bought their first house while I was in college, 1998 or 1999. Sold it in 2006 for 2 and 1/2 times the original sale price. Great timing, huh? They are separated now, but each has a nice chunk of cash not counting their pensions, retirement accounts, and social security.

        But I don't really mean forever. I am 28 now, I imagine I will be ready and able to buy something by the time I am in my 40s, maybe a bit earlier. I just don't want to buy for the sake of owning, and have an outrageous mortgage and feel like I am living at the end of a string, just to say I own a house. I want comfortable living, and I can wait to get it.

        "I'm also not very analytical. You know I don't spend a lot of time thinking about myself, about why I do things."

        by missreporter on Thu Jan 25, 2007 at 09:20:38 PM PST

        [ Parent ]

  •  Thanks KK :-) (4+ / 0-)

    This is good stuff!

    Hopefully I'll be back later to read and comment more in depth :-)

  •  excellent diary! (13+ / 0-)
    All I can say is: Don't buy! I made that mistake. OMG, let someone else take the risk, and make yourself portable. Back in the day, people had their jobs for 20, 30, or 40 years and it made PERFECT sense to buy. Now, we consider it a lot if we keep a job for 5 years. And companies think their trained employees are disposable.

    I bought my condo in March. In April I started working under a bully. In August I lost my job. Around then, the housing market went into the toilet and stayed there. Today my real estate agent recommended I drop my price by over $5k - to $400 less than I paid for my place in the first place.

    I <3 renting!!

    Recipe For America - A people-powered movement to take back our food system

    by OrangeClouds115 on Thu Jan 25, 2007 at 06:10:18 PM PST

  •  You've described me perfectly (6+ / 0-)

    And for those of us who still rent?  Well, my best advice is to keep saving (or paying down debt), pocket the difference and wait to see how the market will play out over the next two years.

    Saving money until I have a reasonable amount socked away, and also until I have something vaguely resembling a permanent job and I know where in the country I'll be living over the next several years. Hopefully, both of those conditions will be met in a couple of years.

    -dms

    Having trouble finding stuff on Daily Kos? This page has some handy hints and tricks.

    by dmsilev on Thu Jan 25, 2007 at 06:10:59 PM PST

  •  I'll repeat the same comment I made... (3+ / 0-)
    Recommended by:
    tryptamine, Elise, kath25

    ...yesterday in a similar thread.

    I'm glad I'm in grad school right now. In a few years, when I graduate and have a real job, the housing bubble will have completely burst and housing prices will be fairly reasonable again.

    Though, just to clarify, interest-only loans and whatnot aren't necessarily bad. Even on a regular mortgage, almost all of your payments goes towards interest in the first few years; you're supposed to struggle at first. Over the years, though, your mortgage payment remains fixed, but your income (should) increase, making housing relatively cheaper (assuming no increases in property taxes, anyway, which isn't a safe assumption in many places).

  •  Commuting Time (6+ / 0-)

    KK, your comment about factoring in your time spent commuting is really apt. My boyfriend lived an hour away by subway from his job. Sure, he saved on rent and  lived in a nice apartment, but it took forever to get out there, and late at night it took twice as long.

    It's a real Catch-22, though, because there isn't a steady decline of prices from the city center outward.

  •  it's ridiculous (6+ / 0-)

    that a decent DOWN PAYMENT is my entire annual salary, and I think I get paid pretty decent!!!

    "I'm also not very analytical. You know I don't spend a lot of time thinking about myself, about why I do things."

    by missreporter on Thu Jan 25, 2007 at 06:14:05 PM PST

  •  Another option that I know has been used (4+ / 0-)

    is to buy something in another state and commute on the weekends. A friend of mine got out of his house in OC at the very top and bought a place in Chandler because his new wife really wanted a big, big place in the country. They bought a bigger place for 1/4 the price.

    He would fly in to work on Monday and home on Friday. I never did ask him how long to get to and from the airport.

    The problems started when his new marriage didn't work out for a couple of reasons and now he's stuck out in a country home alone. Ouch.

    -4.25, -6.87: The next great step will be taken from here.

    by CanYouBeAngryAndStillDream on Thu Jan 25, 2007 at 06:20:00 PM PST

  •  thanks for this! (10+ / 0-)

    People need this information.

    Me, I bought a couple of months ago, my first place.  20% down, 30 year fixed, I'm at 6.25%.

    I got 1/3 of the 20% down payment from my parents (bless them!) and got the other 2/3 from savings.  I'm in a condo, so with HOA, mortgage, and taxes I'm probably paying 35% of my post-tax (and post 6% to 401(k)) income to keep the roof on my head.  

    I'm actually blessed enough to have money to make extra principal payments.  Already I've shaved 13 months off the loan.  I'm such a dork I even figured it out: every extra $100 in principal I pay now eliminates an entire month of payments over the course of the loan.

    Down payments are so important.  No fancy loans.
     

    Don't start a blog, build a community with SoapBlox - the NEW blog framework.

    by pacified on Thu Jan 25, 2007 at 06:20:34 PM PST

    •  Great tip. (4+ / 0-)
      Recommended by:
      eugene, pacified, theran, John DE

      If you can pay down a bit extra on the principal each month, you will indeed save tremendous amounts of interest over the life of the loan. Good work!

      How are you liking the new place? Have you made any home-improvements or projects yet?

      •  ha! (2+ / 0-)
        Recommended by:
        TealVeal, kath25

        well, i've changed a lot of switches and installed some GFI plugs in the bathroom and kitchen where they weren't.  I've been working on the bathroom for way too long (paint, molding, etc).

        Love the view... you can see some images here

        Don't start a blog, build a community with SoapBlox - the NEW blog framework.

        by pacified on Thu Jan 25, 2007 at 06:38:49 PM PST

        [ Parent ]

      •  great tip- (2+ / 0-)
        Recommended by:
        dennisl, kath25

        if you have substantial dough in other investments already. If you're in a position (like most people) where 4 months out of work would put your house in forclosure, it's better to put the dough someplace you can get it in an emergency.

      •  Another tip (1+ / 0-)
        Recommended by:
        kath25

        A few ideas on shaving off years.  The rule of thumb is an extra payment a year will shave off like 7 year on a 30 year loan.  Figure out what an extra payment will be per month.  Say your payment is $600 a month, divide that by 12 and you get $50.  Instead of paying $600 send $650.

        Another tip is to round up.  Lets say your loan payment is $562.  If you round up to $600 you end up paying $38 extra a month.

        As a homeowner you have the advantage of being able to itemize.  Save all recipts for anything you do to your home because it's deductible.  Along with the interest you pay it could amount to a hefty return which you can then send in one shot to pay down the mortgage.

    •  definitely, pick rich parents if you can (6+ / 0-)

      or at least ones who get it that making you wait to inherit can be less productive than helping you with a downpayment or something else to build equity and gain independence.

      Because it's in their interest for you to be stable and independent with a roof over your head by the time they need your help!

      •  Intergenerational housing (6+ / 0-)

        Your comment made me think of another point -- in a lot of cultures, multiple generations of families live together. Housing prices and the slumping economy may make that more likely. Many of my parents' friends don't want to retire, because they would have to sell their houses, and in some areas of the country there's no where nearby to move when you retire.

        It will be interesting to see how many young couples start moving in with the parents/in-laws to save more, or because they just can't afford to live elsewhere.

        •  I was searching the comments to see if this was (3+ / 0-)
          Recommended by:
          pacified, sarahnity, kath25

          mentioned.

          I don't mean to sound like a square, but if you live in the same town as your parent(s), you can save money living at home, if they'll let you.  They may even cook for you ;-)

          I graduated in 94 and the economy was still crap.  My salary was only about $1,100/month and when all my car payments, rent payments, etc. were paid for, I probably would have struggled to save $200/month had I been living with roommates.

          Living with my mom, embarrassing though it was, enabled me to save up enough to get out of my shitty situation and crap job and get on my feet.

          It doesn't help you get dates, but as a short~medium term solution it has definite financial advantages.

          Personally, I'd recommend it.  Saving is critically important and you'd be surprised how helpful it can be to you financially if you can suppress your costs for a couple of years.

        •  That has been happening (2+ / 0-)
          Recommended by:
          theran, kath25

          For some time now. I would be curious to see the raw numbers but I would hazard a guess that over the last 10 years at least 25% of college grads have moved back home for at least 6 months within the first 2 years of their graduation.

          I believe that intergenerational housing is going to be the only way many people our age become homeowners or become able to afford living costs in California. We'll move in to take care of our aged parents and in exchange they'll deed us the house.

          I'm not part of a redneck agenda - Green Day

          by eugene on Thu Jan 25, 2007 at 10:39:58 PM PST

          [ Parent ]

        •  cohousing!cohousing!cohousing (0+ / 0-)
    •  Here's a plan to do that (0+ / 0-)

      Add up the first 5 years and pay that principal off. Be sure to write on the back of the check where they have to sign that it is to be taken off the front end of the mortgage. It is federal law that if you write that it has to come off the front end. So check what they did. Some mortgages just take it off the front end anyway and some do not, they take it off the rear where it doesn't do you any good. Be sure to pay your regular monthly payment. So the first month you have reduced your mortgage to 25 years. Try to do 3 years with the next payment and then 2 years with the third payment. You are now down to a 20 your mortgage. Then you can just do the next principal payment on the amortization schedule with each monthly payment and your 20 is now down to 10 but your regular payments are less as it was originally a 30 year.

      This is how you save more on a 30 year mortgage than you do with a 10 or 15 or 20.

      I really love this stuff.

      •  what do you mean "front end" (1+ / 0-)
        Recommended by:
        abbeysbooks

        Do they not apply the extra payment to the outstanding principal and instead just reduce the total number of payments that you must make by one (if you send in one extra payment)?  Wow, I had no idea that was legal.  That's like taking your money interest free for the life of the loan!

        •  Banks are tricky (0+ / 0-)

          If you look at the amortization schedule you will see that in the beginning the interest payments are very high and the principal payment is just a few dollars. For example on a 30 year 100K at 10% if you look at that schedule the principal payments for the first five years are about $300. So if you are paying off principal you can calculate the years off your mortgage. So on the above one send your regular payment plus $300 and your mortgage has instantly gone from 30 years to 25 years. $300 along with the second payment won't get you 5 years off, but if you loo9k at the schedule and add some more you can take off another 5 years. Now you are down to a 20 year but the beauty is your monthly payments are still calculated as if it were a 30 thus keeping your monthly payments low in case of something.

          Now make sure you get a mortgage with no prepayment penalty. Ask for it and make sure that part is initialed at closing. OK? So far? Now when you mail those extra principal payments in on the back of the check be sure to say that this principal payment is to be deducted from the front end of the amortization schedule. That is where it will do you some good. If they take it off the end then you don't even reduce it by one month on the above mortgage.

          Federal law says they must do that as long as you put it in writing. But if you don't say then they can take it off the end where it is to their benefit to do so. Then of course before payoff you are going to have to do some math because you have been charged interest on money you have already paid. Each time you make a principal payment an entirely new amortization schedule goes into play. They won't do that and if you don't know better, then you won't either and they will gt to keep the interest on money you have already paid them.

          Now are you beginning to understand why it is important for the system to keep kids dumb about math?

          •  Just to be clear (1+ / 0-)
            Recommended by:
            abbeysbooks

            You are saying that if you don't explicitly say on the back of your check, your bank is free to apply your extra payment as the last payment in your schedule rather than to apply it directly to the outstanding principal?  So in essence, your bank is taking your money, holding it for 30 years, and then, when that last payment is due, saying "that's ok, you don't need to pay it, we already have that money."  So they are in essence holding your money interest free for 30 years.  Like I said, I had no idea that was legal!

            •  Yes it is legal (0+ / 0-)

              That is why Congress passed a law saying that it was not legal if a person wrote on the back of the check (or you could do it on a separate piece of paper but I wouldn't) saying where it was to be applied!

              If you have been doing this go to your bank now and check just to make sure. If you find out they have been applying the principal  payments to the back end instead of the front of the amortization schedule, then start a fuss. Say you explicitly included a signed piece of paper in your letter with your check saying it must be applied to the front end. Ask to see the paper (yes, I know you didn't include it) and be loud, make eyes turn in your direction, threaten legl action.

              And know the number of the law before you go. I don't have it at my fingertips but the next time I go up on the third floor I'll look. I do have the number. It does exist. You can find it. When you throw that down in front of them they will cave.

  •  ouch. (2+ / 0-)
    Recommended by:
    OrangeClouds115, kath25

    $1700?
    owwwwwww.
    We pay $800 here in sacramento, and at first I thought that was painful, but we got used to it, i suppose...

    I'll probably rent forever, I've never known anything else - my mother has never owned, and I probably won't for a looong time.

    This thing isn't over yet. Charlie Brown for Congress!!! -4.00,-3.54

    by Rebelatheart on Thu Jan 25, 2007 at 06:20:46 PM PST

  •  I need a new poll choice:Bought at the bottom BUT (5+ / 0-)

    in a limited-equity condo unit in a cohousing neighborhood, so resale price is capped based on Area Median Income... typically going up a few percent a year. So we can't make a killing on it, but we're in, building equity the old-fashioned way through loan paydown, and if we ever want to sell here and buy at market prices in the area we'll have to come up with outside funding to make up the difference... on the other hand, we're well-insulated from market downturns, we'd have to see prices in this still-rising market decrease 60% before we're underwater.

    Note that most cohousing in the U.S. is mostly market-rate, with exceptions like this; only a few communities are entirely limited-equity/affordable as ours is.

    •  Well I'd like to initiate it for people (0+ / 0-)

      as my town is still asleep real estate wise but it's starting to wake up. Things have almost doubled since 03 but then so has gas so it even out to the same I think.

      I'm also looking at a large victorian commercial building in Sullivan near St. Louis. It's a honey and I think I could get it cheap for a group of people who want lofts and a commercial storefront, but still want to work in St. Louis. Talk about a commuter train going through tho 2 years away or more. Then the price will be out of sight. Now is the time.

  •  I'm 38 (6+ / 0-)

    Did I miss some magic real estate moment that wasn't available to the 35-and-under group?

    Renting is nice, especially in parts of the country where there is snow to shovel.

  •  Lucky I. (4+ / 0-)
    Recommended by:
    John DE, abbeysbooks, dennisl, kath25

    Bought a house on 5% down with a 4.99% fixed-rate mortgage at a very reasonable price.  Right now I pay something like 25-30% of my income on housing costs.

    I have several advantages:
    (1) The biggest, I live in what must be one of the most affordable cities in the US, Pittsburgh.
    (2) I'm pretty handy around the house and have several brothers and a father who are the same, so I was able to do a TON of work for little more than the cost of materials and several hundred cases of beer.
    (3) No kids = more discretionary income.
    (4) Luck put me in position to buy during the best buyers' market (price-wise and rate-wise) of the past several decades.
    (5) I have low standards, so if something happens and I have to live on rice & beans in order to keep the house, I can do that.

    I'm not sure if I'm gloating or if I'm showing that it can be done, if only every positive force in the universe lines up on your side at the same time.

    •  I (3+ / 0-)
      Recommended by:
      dennisl, kath25, I

      where are you at in the Burgh?

      My mom keeps taunting me with the low low prices of emerging neighborhoods where kids are paying $30k for a house, gutting and reselling.  I am here in Cali, where the thought of owning is crazy.

      I still keep saving, thinking one day I will use it for a downpayment, but like the diarist says, 20% is crazy talk these days.

      •  Cheap in Pittsburgh... (2+ / 0-)
        Recommended by:
        kath25, I

        That could be anywhere excluding Mt. Lebanon (and immediately surrounding areas) Shadyside, and parts of Squirrel Hill. Houses have gotten expensive in the latter two, though from what I recall, rents haven't nearly caught up.

        I definitely recall seeing run-down houses being sold for under $50k in not-too-bad neighborhoods, though I am almost three-years-removed from the area.

      •  Lawrenceville. (2+ / 0-)
        Recommended by:
        dennisl, kath25

        Maybe you know a little about it -- I'm also lucky in two more ways.  I grew up here (actually, I lived in a different neighborhood but went to school and played ball here) so I knew the streets well and was able to find a house fairly quickly; and I happened to move back to the Burgh and start looking for a house just before prices in the neighborhood exploded.  People are now paying $150K for 15-foot wide row houses (I know all the rest of yinz think that's a pittance, but it's a good deal of money in this city) whereas I got my 3-floor, 6-room house with a garage and basement for under 70.

        And yes, it is one of our favorite pastimes here to taunt friends and family in other places over housing prices.  :p

    •  Tht's exactly the way I feel (0+ / 0-)

      If the universe wants me to have it then I will. No more grubbing and grabbing.

  •  I take it no one will be bidding on this one (2+ / 0-)
    Recommended by:
    theKK, kath25

    -4.25, -6.87: The next great step will be taken from here.

    by CanYouBeAngryAndStillDream on Thu Jan 25, 2007 at 06:36:23 PM PST

  •  The Do-It-Yourself Approach (3+ / 0-)
    Recommended by:
    raines, OrangeClouds115, dennisl

    Another option for buyers is to look for homes with good "bones" in less-than-ideal neighborhoods and fix them up. Eventually, in most cities, these neighborhoods might pick up, which can raise the value of the home.

    However, there are a few caveats. For one, the home improvements can raise the assessed value of your home so much, you can't afford to pay the property taxes. This can prove horrible, if the neighborhood hasn't picked up, and the re-assessed value of the home outpaces the area.

    The other issue, of course, is that gentrification itself raises a lot of issues, some of which are not too pleasant. It's not a great idea to buy into an area hoping that it changes. Also, as the economy starts to slump it's not a safe bet to assume that every neighborhood is going to improve.

    So, something else to think about.

  •  More thanks... (5+ / 0-)
    Recommended by:
    eugene, iiiii, OrangeClouds115, dennisl, kath25

    for this diary. I'm really glad to see such an informative post on something so applicable to my situation.

    I'm 26, just left grad school, and about 25% of my income is going to pay student loans. Thankfully, I have a partner who I share an apartment with or else I simply wouldn't be able to afford to live while working one job. And this is in an area with an extremely low cost-of-living.

    I figure in 2 1/2 years I'll have enough saved up for half the down payment on a house (My partner paying the other half).

    In this area a small, decent "starter" house like we're looking for goes for just over $100,000. Yeah, I know, it's nothing compared to house prices in other places, but that's what's so great about living where I do-- you can get by pretty cheaply. Even so, I'll probably just be getting by. This is even with my 9 years of college.

    Moral of the story: More college doesn't necessarily mean a higher-paying job, especially in the circumstances we see today. Every prediction of one's hypothetical future earning capacity should be tempered with this realization. Hope for the best, but prepare for the worst.  

    Populism Means People-Power

    by bluejeandem on Thu Jan 25, 2007 at 06:43:35 PM PST

    •  It's all connected. (6+ / 0-)

      The DEBT in this country is an omnipresent problem. Between student debt, credit card debt, and housing debt, how is anyone supposed to get ahead? I mean, you need the student debt to get an education, to get a job that offers a chance of making a halfway decent living.

      Plus, the areas with lower costs of living often have lower-paying salaries. Our Under-35 lives have become the literal outcome of Bush and Cheney's "ownership society" -- you have to be independently wealthy to be able to have what amounts to a moderate, middle-class lifestyle.

      (And forget about saving for retirement or our own kids' educations. We'll never retire!)

      •  I don't entirely agree (1+ / 0-)
        Recommended by:
        kath25

        Just note that the states/countries/towns/etc. with the most debt are also the richest.

        Debt, if used PROPERLY, is supposed to be an investment; sure, you pay a few percent a year on student loan debt, but the benefits of that education far outweigh the costs. Go compare average incomes of people with and without a college degree; it must be at least 50%/year.

        The problems begin when debt is used improperly--to finance things people can't afford simply because they want them, not because it actually benefit them.

        As far as getting ahead goes, I don't think anyone can argue that our relative lifestyles are much better than those of two or three generations ago. If we were REALLY struggling right now, we'd be at second jobs instead of bitching about it online.

        •  Debt vs. Debt (1+ / 0-)
          Recommended by:
          dennisl

          Your point on student debt is apt -- when a bank or someone looks at a person's finances, they consider student debt to be "good debt" because it, as you aptly point out, is a great investment in your own future.

          However, the student debt tends to go hand-in-hand with consumer debt, and not just for spendthrifts. I know several "cheapskate" grad students who still have to put basic expenses on the plastic.

          The biggest concern, I think, is that we're just stretched so thin already. Even though my student debt is "good," I still will have to cough up all that money, rather than saving it.

          •  I don't worry too much about it (1+ / 0-)
            Recommended by:
            kath25

            If I rake up a few thousand in credit card debt in my years in grad school, it's not the end of the world, given that our stipends in grad school (for those of us lucky enough to be fully funded) are much lower than what we'd be making if we took real jobs now, and (hopefully) much MUCH lower than what we'll be making at the end. However, a few thousand extra in five years is relatively nothing; hence, I consider it lifestyle smoothing.

            So, yes, you're going to be stretched thin. It's a natural consequence of going from somewhere between 4 and 12 years (undergrad and grad school time) without a real job, without bringing in a real income. That time needs to get paid for somehow.

          •  Tell me about it! (2+ / 0-)
            Recommended by:
            dennisl, kath25

            Allow me to bitch a little bit more...

            If this educational loan was actually "good debt", I wouldn't feel so bad about it and it would not be limiting my income so much (which it was supposed to increase in the first place).

            Right now I'm on an income-contingent repayment plan on which I'm not even paying enough to cover all the interest which is adding up month after month.

            More education may increase income on "average", but actual, real-life people don't live and work in a world of "averages".

            Populism Means People-Power

            by bluejeandem on Thu Jan 25, 2007 at 07:19:48 PM PST

            [ Parent ]

        •  Student loan debt (8+ / 0-)

          I think society was better off when things like the GI bill paid to educate people.  When you asked students in the '60s what was important in life, they said things like making a difference and public service.

          Nowadays, when schools and banks try to extract for themselves a big part of the economic benefit of a college education, you get college students saying that making money is the most important thing in life.

          I do not see anything wise about burdening educated young people with debt--having to repay loans cuts off many possibilities, and many choices young people could make that would benefit society.

          My student loans have been paid off for a while now, and I feel this more strongly now than when I was still paying them.  We would be better off if we looked at education as something that benefits society instead of something that only benefits the individuals who graduate.

          •  A large part of the problem, actually... (1+ / 0-)
            Recommended by:
            kath25

            ...is the ultra-competitiveness of the college acceptance process.

            Everyone wants to go to the top schools because they think it'll automatically be worth it. Really, for it to pay off, you need to be motivated and  willing to work hard. Lots of smart people that aren't really motivated might be better off excelling at a cheaper university than struggling along with below-average grades at a top school.

            (I don't mean to restrict motivation or success to grades only--there are many other factors also--but I was just giving an example.)

            I see absolutely nothing wrong with having "making a lot of money" as your goal. The problems begin with people who think, "If I have this prestigious degree, I WILL make a lot of money." The reality is actually opposite; students from the top universities, on average, make more BECAUSE they are smarter, more motivated, etc.

            •  College acceptance (2+ / 0-)
              Recommended by:
              sarahnity, dennisl

              There are more college-age people now than 20 years ago when I was applying, so the process is somewhat more competitive than it was then, however, the stats that show colleges accepting a smaller percentage of their applicant pool are misleading and overstate the competitive situation.  

              Nowadays, students have a unified online application that takes less work per institution; also the application fees per school have actually gone down in real dollars from 20 years ago.  So today, students apply to 10 or 20 schools.  Twenty years ago, five or six was normal, since each had to be typed (on paper!) and had separate essay questions, recommendation requirements, etc. as well as a higher per-school application fee (50 1986 dollars, which is about 100 2006 dollars).

              The whole thing snowballs, of course.  I only applied to three schools and was sure I'd get into the University of Wisconsin.  Now even decent Wisconsin students get turned away from Madison, so they need multiple backup applications.

          •  GI Bill (3+ / 0-)
            Recommended by:
            abbeysbooks, dennisl, kath25

            The people going to college in the 60s were not doing it on the GI bill.  They were the children of those that had gone through on the GI bill.  The GI bill was an amazing program and really changed the class structure in our society.  Before that, going to college or owning your own home was pretty much only the purview of the upper class in this country.  Suddenly that became the expected lifestyle of the middle class.

            Joining the Army can still pay for college.  Not what I would recommend or anything because I'd rather worry about how to make repayments than how to survive getting shot at.  But that's just me.  And besides, I have already spent more time in school than any 3 people out there.

            •  GI Bill, post-Sputnik NSF $$, cheap state schools (1+ / 0-)
              Recommended by:
              sarahnity

              By "things like GI Bill," I was waffling on my laziness in not researching the exact numbers, but there was widespread use of the GI Bill well beyond the end of WWII, and a lot of NSF money for science and engineering students, and you could afford state schools with a part-time (or sometimes full-time) job and no debt.  There was much greater public support of higher education, and much lower out-of-pocket costs to students.

            •  Me too and I don't regret (1+ / 0-)
              Recommended by:
              kath25

              even one year of it.

              I am about to embark on my 35th career, I think it is. and all thanks to kos. I'll keep you posted. No pun intended.

          •  How else were they to get dirty hippies (0+ / 0-)

            out of the protesting game and on the treadmill. It was a clever clever plan.

      •  It's not an accident it is planned that way (0+ / 0-)

        Keeps you running around in the squirrel cage.

  •  Yet Another Way - - (3+ / 0-)
    Recommended by:
    eugene, thereisnospoon, kath25

    The Boomers have screwed the next generation.
    The Boomers get all this massive increase in equity which keeps the economy afloat - falsely and temporarily - and the next generation gets obscene housing costs and is closed out of ownership - whether because of cost or common sense.

    •  yeah--and add to that the fact that boomers (4+ / 0-)
      Recommended by:
      fnb, eugene, johnnygunn, kath25

      have no real savings on the whole (yes, there are responsible ones out there!), have put their kids and grandkinds into massive national debt, and will expect the government to subsidize their healthcare costs as they age.

      It's fantastic.

      Republicans: By their rotted fruit you shall know them.

      by thereisnospoon on Thu Jan 25, 2007 at 06:48:07 PM PST

      [ Parent ]

      •  Don't worry guys... most of them will be forced (3+ / 0-)
        Recommended by:
        pacified, abbeysbooks, kath25

        to sell their places to pay for their health care.

        You can pick it up later at a steep discount ;-)

        I share your knee-jerk contempt for boomers in general, unfair though it actually may be.  I always feel like they're leaving us flaming turds all over the place.  Sort of like Bush...

        •  Part of the problem (3+ / 0-)
          Recommended by:
          eugene, abbeysbooks, YoyogiBear

          is that many of boomers were raised during the 20 years of unprecidented "prosperity" following WWII, which has accustomed them to a different lifestyle.

          That lifestyle has been passed down to many people of our generation, which has imbued waaaay too many people with an untenable manner of living.

          We need to think like people during the Great Depression.

          •  True. We'll be America's next Greatest (2+ / 0-)
            Recommended by:
            eugene, kath25

            Generation :-) because we'll be forced to be scrappy like those who lived thru the depression (and unlike our parents who benefitted from America's dominance in the decades following WWII).

          •  That's me as my mom came of age in it (0+ / 0-)

            and Dad too. I've had lots of money and no money. Money comes and goes. Once you've made a lot you know how to do it. Only I don't have the motivation for it now. If the universe wants me to have it I will, if not I won't.

            BTW I might, just might, have just bought a Van Gogh in a thrift antique shop. I'm checking it out. It will pay for all the art history courses I sat in for love. You could audit in those days for free.

        •  I was a little older than they at the time (0+ / 0-)

          but for the most part I share your evaluation of them. Narcissistic.

          They had the world in their hands and threw it away for student loans.

    •  Worst of all -- (3+ / 0-)
      Recommended by:
      eugene, johnnygunn, abbeysbooks

      if (when) the housing market crashes and all of those God-awful home equity loans collapse, then we're all in deep shit. Though the houses might come down in value.

      But who wants a McMansion? Most of the houses built today are ridiculous anyways. Where are the residential neighborhoods full of modest bungalows? Who needs 4 bedrooms?

      •  Supersize Me, Baby! (1+ / 0-)
        Recommended by:
        kath25

        Double beds, Queen-sized, King-sized.
        Studebakers, Ford LTDs, Hummers.
        Bungalows, Split-Levels, McMansions.

      •  Multi-unit housing. (4+ / 0-)
        Recommended by:
        eugene, raines, abbeysbooks, kath25

        Think about it.

        If the housing market tanks then you can buy big unaffordable homes, and carve them up into smaller, affordable homes.  I suspect that this will happen as the builder begin to realize that they can no longer sell these monster houses.

      •  The director of my doggie rescue non profit (0+ / 0-)

        lives in a McMansions and so do the doggies in the kennels waiting to be adopted. Air cooled and heated. Better than any puppy mill or breeder. Her house is huge, and I mean huge on 15 acres about 45 minutes from St. Louis.

        And it is falling fucking apart. And she still doesn't get it.

        A friend married a man for his money and he lived in a gated community just outside of Springfield. It is also a country club with a tornament golf course and huge clubhouse. Got the idea.

        So he went into a nursing home and she was delighted. The real estate agent started showing the place. He had been the first owner as it is fairly new. While the agent was showing it the master bathroom caved in and the prospective buyer and the real estate agent almost went down with it.

        It sold for a song for anyone who could put a floor in correctly.

    •  But their plan can't work (1+ / 0-)
      Recommended by:
      kath25

      They can't all sell off their stock at the same time and expect to make money for retirement.

      The can't all sell off their houses at the same time and expect to make money for retirement.

      Not so great for Gen X, but Gen Y should get some good deals on houses in a few years.

      •  Therein Lies the Problem - - (3+ / 0-)
        Recommended by:
        eugene, dennisl, kath25

        Starting in 2010 (1945 + 65) there is going to be strong selling pressure in the stock market.  Same goes for housing.  How can the next generation build up equity if near all forms of investment are flat or downward trending??

        •  Don't buy until after they sell? n/m (2+ / 0-)
          Recommended by:
          johnnygunn, kath25
        •  asdf (1+ / 0-)
          Recommended by:
          kath25

          The stock market pressure won't be too strong, actually.

          Starting between 45 and 55, most of these people gradually move their investments from stocks to bonds and other low-risk investments. By the time someone turns 65, they typically don't have more than 25% of their portfolio in stocks (and that may itself be a high number--ask a financial planner). Hence, you're already seeing the "downturn."

          Housing shouldn't be too bad, either. The older folks will want to move into smaller homes; I doubt many of them are moving into retirement communities at 65. The housing market will probably undergo both regional and varietal fluctuations, but this itself won't cause it to crash. (In the worst case, seniors unable to sell their houses because of inflated prices will put off retirement for a few years.)

          •  Economics happens on the margins (1+ / 0-)
            Recommended by:
            dennisl

            It doesn't take all of the stocks or all of the houses.  It just takes a few of them to affect prices--especially whether prices are going up or down.  By definition, it only matters for houses that are for sale, and retirement and death mean that Boomers are going to be doing most of the selling to the rest of us.  

            In the case of stocks, Boomers might find overseas buyers to buy the stocks they sell off as they retire--there aren't enough American Gen X'ers, and Gen Y'ers are even more broke.  Of course, the presumes that the US dollar remains strong over the next few years and beyond, which seems unlikely.

            Housing needs people here to afford the houses.  How many homes can the top 1% really make use of?  Even if they all buy 10 if them, housing prices have to eventually meet up with what the average worker can afford on a sensible mortgage.

    •  Abso-fucking-lutely (0+ / 0-)

      The boomers have totally fucked the entire thing. They won't let people build more density, insist on housing as a source of wealth and so pursue policies to maximize land values, and leave us all footing the bill through higher costs of living.

      They have a lot to answer for.

      I'm not part of a redneck agenda - Green Day

      by eugene on Thu Jan 25, 2007 at 10:43:49 PM PST

      [ Parent ]

  •  One of my smartest high school friends (4+ / 0-)
    Recommended by:
    theran, dennisl, YoyogiBear, kath25

    Didn't do what the rest of us did as soon as we thought we could afford it.  She waited until she had a house before she bought a car.  She lived (and happened to work) near the bus line, and took the bus everywhere for a few years.  The cost of a car for a few years roughly equals (or at least equalled) a down payment on a house (at least in Wisconsin).

  •  Well (1+ / 0-)
    Recommended by:
    kath25

    I live in DC and simply don't want a condo right now. I prefer renting because my utilities are included. If something breaks I can call the front desk and have them fix it for me. I don't have to pay for my plumbing and other costs.

    I will own someday, but not until I have enough for the traditional 20% downpayment. I am 28, and I honestly don't expect to be in a position to own until I am 35 or older. I hope to buy by age 40, but that is no guarantee.

    I guess that I don't want to own mainly because I don't want to deal with the burdens of maintenance and also because I can't afford the payments right now. I could qualify for "creative financing", but I don't want those mortgages.

    http://www.keen.com/jiacinto For DC related travel advice, please visit that link.

    by jiacinto on Thu Jan 25, 2007 at 06:48:40 PM PST

    •  My son is 32 now. (1+ / 0-)
      Recommended by:
      kath25

      He bought about 6 years ago, while he was still single.  He took out two mortgages and had us cosign, as he wasn't earning enough.

      But the house had 4 bedrooms, and he had 3 good friends who were willing to rent from him. So that's how he managed.  He's married now, but the wife has the stable income with health care and he freelances.  He also cares for the kids while she works--which number jumped from 1 to three last month.

      Not easy to handle--but he's coping.

      •  I don't want roommates (0+ / 0-)

        I don't want to have to deal with sharing a place with several other people. It works for some people, but I've heard of many horrible living situations that friends of mine have had to deal with. I've heard stories of roommates not paying their rent on time, being extremely slovenly, and being disrespectful.

        That is why I choose to live alone even though I could probably save some cash living with other people. I can come and go as I please. I don't have to deal with people being loud in the middle of night. I don't have to put up with other peoples' filthy habits.

        So, while I wish that I could own, I also realize why it's not the best thing for me. In 5-10 years, though, I hope that I will be in a better position to own.  

        http://www.keen.com/jiacinto For DC related travel advice, please visit that link.

        by jiacinto on Thu Jan 25, 2007 at 09:44:18 PM PST

        [ Parent ]

  •  I hate HOAs.* (do they really suck?) (3+ / 0-)
    Recommended by:
    raines, dennisl, kath25

    Here, the only think I could afford is a condo.  I can afford only something with a low HOA.  I feel like HOA is sorta like flushing money.  However, I don't need/want a pool, I'm able to shovel, mow, paint, etc.  So, am I wrong about HOAs being a waste???

    *on the other hand, I should probably love HOAs since they have kept me priced out of buying.  For many reasons, I'm glad I don't own.

    "Dissent is the highest form of patriotism." Thomas Jefferson

    by Ambrosius on Thu Jan 25, 2007 at 06:49:28 PM PST

    •  I agree (2+ / 0-)
      Recommended by:
      Ambrosius, kath25

      But it's mostly because the thought of other people telling me what I can and can't do with my own house sickens me.

    •  we use HOAs for good (2+ / 0-)
      Recommended by:
      Ambrosius, kath25

      here we do most of our own work, run the Home-Owners Association by consensus, and do our darndest to keep rates down. Consider it forced savings so that you're ready to pay for that 20-year roof when it self-destructs in exactly 20 years.

      Just last night I was at a presentation by an affordable-housing development corporation that is using lots of tricks to help get people into homes in an expensive Bay Area market, including using a steel roof supposedly good for 200 years: that decreases the amount of reserves, and therefore your HOA dues, to an affordable level. Let's see if the state Department of Real Estate agrees and approves it.

      Raines

    •  HOAs much like Democracy/Activism (1+ / 0-)
      Recommended by:
      Ambrosius

      it's what you make it, right?

      Make sure the HOA replaces all the lights with energy efficent bulbs!

      Do they have recycling?

      How about those new washers and dryers that use sooo much less energy and water to do there thing.

      The big one I want to get going in my building is some sort of solar or wind power.  I think that would be so cool.

      Don't start a blog, build a community with SoapBlox - the NEW blog framework.

      by pacified on Thu Jan 25, 2007 at 09:42:55 PM PST

      [ Parent ]

  •  Rent vs. Buy (6+ / 0-)

    I've done the math - just the monthly mortgage payment and homeowners insurance alone would be over twice what I pay in rent. Let alone maintenance, property taxes, and other expenses.

    As a renter, I'm able to save a decent amount every month and have a bit of disposable income to, um, have fun (go to a movie or live music performance).  

    If I were to buy - virtually every penny would be dedicated to the house and covering the necessities like food and basic utilities.

    So, I keep on saving and paying the down the remaining bits of my student loan until I have enough squirreled away to make a sizable enough down payment for the monthly mortgage payment to actually be affordable without making me broke.

    I might get there in a couple of years if housing prices lower a bit or remain stable for awhile.

    A slip of the foot you may soon recover, but a slip of the tongue you may never get over. - Benjamin Franklin

    by meowmissy on Thu Jan 25, 2007 at 06:49:34 PM PST

    •  The empty box (1+ / 0-)
      Recommended by:
      theran

      Good point -- for many buyers, you can only afford your four walls. The cost of keeping the house or apt. can eat up every penny, which in turn puts more $$ into the credit cards.

      It's a tough decision. Is it worth foregoing everything else in order to afford a home?

      •  A very empty box (5+ / 0-)

        A co-worker and I were talking about this the other day. Even if we could afford a house, we couldn't put anything in it other than the junkie furniture from the place we're renting.

        All the furniture I own came to me second hand through places like the Salvation Army or that glue it together yourself particle board crap.

        People talk about buying homes and renovating them - I wouldn't have enough money left over to decorate them.

        How sad it that!

        A slip of the foot you may soon recover, but a slip of the tongue you may never get over. - Benjamin Franklin

        by meowmissy on Thu Jan 25, 2007 at 07:03:01 PM PST

        [ Parent ]

        •  I build mine. :-) (2+ / 0-)
          Recommended by:
          ManfromMiddletown, theran

          Draw a design (or copy one from a store you like) to go Home Despot, have them cut the wood. Screw, nail, sand and stain it yourself! :-)

        •  i know--remember when people (1+ / 0-)
          Recommended by:
          kath25

          bought and lived with it?  None of my friends’ moms had designer kitchens growing up—now they put stainless steel appliances in a studio apartment.  

          I remember back in 1998 when a family moved into the neighborhood and immediately started all these expensive renovations on this $750,000 house they had just bought.  I assumed they were rich to be remodeling, having just made the biggest purchase of their lifetimes.  

          Boy was I naive.  I assumed people only paid for things they could truly afford.

          •  Ugly Kitchens! (1+ / 0-)
            Recommended by:
            theKK

            Ugly kitchens went the way of moderate lifestyles. I grew up in a house with an ugly, ugly yellow kitchen. Mom would re-paper it herself every few years, but the yellow counters (and yellow vinyl flooring with a big seam down the middle) were there to stay.

            Mom and I are sure that when she and Dad finally sell their house, the buyer will blow the back wall off and triple the size of the kitchen. Who needs so much kitchen? (Just more to clean!)

            •  Thats what my parent's house is (2+ / 0-)
              Recommended by:
              theKK, kath25

              like.  Completely yellow, tiles, yellow checked countertops, yellow stoves.  Now that they have paid off the house they are going to fix the leech bed system first then re do the kitchen.  The house is shabby, but they are putting 4 kids through college.

          •  Puhleeze (2+ / 0-)
            Recommended by:
            sarahnity, kath25

            I had a case where a youngish couple bought a spanking brand new house for over a million then immediately proceeded to blow out a wall in the library so they could make the library 8 feet larger.

            I shit you not.

        •  Ah! Not sad. You are open to suggestions,eh? (0+ / 0-)

          Go to estate sales as that is where the antique and thrift shops go to get stuff. Scout them before you want to or need to buy. Get the lay of the land.

          Also in Indy the Salvation Army takes Valtek or something like that, anyway they are coupons you print off your computer. You can find it through google. Valpak?

          50% off everything at the SA in Indy. Other thrifts have tag sales. The goodwill has a different sale every day. I call them to see what's hot.

          Just start looking and soon you will never think of buying retail again. You can have everything you ever thought you wanted for 10 cents on the dollar and I am talking about a 1950 dollar.

          And when you are on your way to somewhere stop at the yard sales. Now if you are a serious yard saler you will go at 5:30 am in the morning to get stuff. Me I never do that.Never. I wait until late afternoon when they are starting to think about having to pack up all that stuff again and put it back where they don't want it. Then you get the bargains. Or at the very end swoop in with a truck and offer a deal on the whole lot. I never do that. I have too much stuff as it is.

    •  That's been my math, too. (2+ / 0-)
      Recommended by:
      raines, kath25

      Last summer, I was talking to my realtor father about maybe buying something.  I could make the budget work, but....  

      Ultimately, I was able to re-sign my lease at a rate that allowed me to save more than I would have paid into equity (appreciation on condos is very small here, so that doesn't factor).

      My realtor father said that it made much more sense to rent in this case.  I mean...he is programmed to extol the benefits of buying, and he thought that was a poor choice for me given my good rent.

      More importantly, I found great value in the flexibility of the lease.  When I found out that I just could not afford the austerity that my budget required if I were to save anything at all, I was able to break my lease more reasonable accommodations were found.

      "Dissent is the highest form of patriotism." Thomas Jefferson

      by Ambrosius on Thu Jan 25, 2007 at 07:03:50 PM PST

      [ Parent ]

    •  The trick is to buy the first house (0+ / 0-)

      in a neighborhood that is going to go up but hasn't yet. If you can't tell then this comment isn't for you. You don't have to love it or anything like that.

      Live in it and do minimal. Surface stuff like painting etc and wait. You will be able to sell bcause you won't have to get all that money back that you put in. Just continue to live your life while you are in it.

      When you sell you will have equity for the down payment. You won't need to scrimp and save. This is how I made my first million in ten years. But I lost it thru betrayal so now am working it differently. I refuse to work hard at anything I don't feel compelled to do. I feel compelled to rescue doggies and the universe keeps sending me wonderful darlings to get to safety. I have a great business or two on the back burners but can't get off kos long enough to do them. But kos has led me to a newspaper job I think I'll get. So that is what I think the universe wants me to do.

  •  I'm a renter (1+ / 0-)
    Recommended by:
    kath25

    I currently share an apartment with a friend who will be leaving me at the end of this summer (he is getting married).  I live Louisville, which has a very low cost of living, so that's helping me out.  My half of the two bedroom apartment plus utilities comes to just under 400 per month.  And it's not a crap apartment.  It's a decently sized, fairly nice apartment in a good area.  If I can find a new roommate to replace the one leaving, I will stay here at least until I graduate (I have about 2 years of school left.)

    I plan on figuring out what I can afford per month, then doing a simple calculation to figure out if I "throw away" more money renting and saving or buying and paying interest.

  •  My story (3+ / 0-)
    Recommended by:
    theKK, KiaRioGrl79, kath25

    Don't know if it helps or not..  I'm 29 and have had my house for over 4 years.

    Since I went to a community college and a state school nar my parent's house, I was very fortunate to escape college with very little debt (~$5k).  For my first year of work, I rented an apartment for $750 a month.  I bought a car and started making heavy payments on my student loan.  At the same time, I stuck 5% away into a company stock purchase program.  No vacations, no fancy dinners, and no furniture- well, I got some free stuff people were throwing away.  After a year and half, I was able to save up $5k.  With that, I started looking into getting house.

    Talked with a realtor about my options.  With help from the seller, my 5k was just enough to get the ball moving.  After several months of looking, I eventually found an area in part of the state that was actually affordable.  Eventually, I found my house.  I was able to put down 2%, take the hit on the penalty and get a couple thousand back from the seller to help on the closing costs.  Went from paying close to $800 a month in rent to paying around $1000 for my morgage payment.  Although that sounds high, I also get enough tax breaks to make up the difference.

    As far as I'm concerned, it's was a fantastic thing for me to do.  Grant it, for the first 2 years I lived here I still didn't have furniture and never went anywhere.  But after paying off the car and the student loans it all changed.  2 years ago, I refinanced the loan.  Lost 1 point, dropped the term from 27 years down to 20 years, and saved $300 a month on the payment.  All in all, I very happy I did it.  

    Even after 4 years, I don't get upset over shoveling snow or mowing the law.  In fact, it feels good to do it.  It really has been a good thing and something I very happy that I did.

    Montco (PA) Dems, get involved! Let me help you do it.

    by Brother Maynard on Thu Jan 25, 2007 at 07:16:20 PM PST

  •  aoeu (2+ / 0-)
    Recommended by:
    juls, kath25

    I just bought a condo, however I'm not sure that I can be much help as I bought it from my parents..

    turtles consider
    every single vote deeply
    yet always vote dem

    by TealVeal on Thu Jan 25, 2007 at 07:24:33 PM PST

  •  Want a place of your own? Consider This! (1+ / 0-)
    Recommended by:
    raines

    This is a brilliant idea, and the houses are cool:

    http://www.lowes.com/...

    These houses were were targeted at Katrina victims but I think anyone can buy them.  If you don't need a huge place, they're sufficient, they're stronger than mobile homes and they look great.  It struck me as funny that no one had thought of this before.

    •  More alternatives: Little House on a Small Planet (0+ / 0-)

      Fascinating look at housing through history, showing what an anomaly current conditions are, and looking at lots of alternatives, in terms of financing, construction, arrangement, etc.

      BTW, California Kossacks, the author is on tour, will be in Santa Cruz tonight, SF Sat. night, Berkeley Sun. early afternoon. Come catch a slideshow/discussion!

  •  I currently rent (4+ / 0-)
    Recommended by:
    theran, raines, sarahnity, kath25

    but i am getting the "Settle the fuck down and nest, you little horny bastard" urge something fierce.

    so I don't know what to do. Don't even know if I'm going back to school now.

    I'm seriously looking at one of those 40 year mortgages. Unfortunately, I make too much for the county's first time buyer program, but I really don't have any closing costs saved. I'm hoping there's other programs out there.

    RealClimate.org- READ IT

    by terrypinder on Thu Jan 25, 2007 at 08:55:47 PM PST

    •  40 year loans aren't bad (1+ / 0-)
      Recommended by:
      raines

      for young people like us who are looking to stick around for a while.  I bought my condo on a 40 year loan.  A few years later I refinanced it down to 30 years.  It keeps the payment low for the first few years which are the most critical and most difficult.

      There are now 50 year loans out there as well.

      •  an affordable project uses 40-year loans (0+ / 0-)

        to keep payments down. Whatever they can do to get people into fixed-rate products.

        Of course, the assumption that income tomorrow will be greater than or equal to income today is a dicier proposition these days...

  •  Thanks for the diary... (2+ / 0-)
    Recommended by:
    raines, kath25

    Even though my market isn't expensive, it can be tricky.  So much of the new construction is out of the range of a single person of moderate income.  It's either shanties or mansions, but I took an older condo where I got a lot more space for my money.  I've had to put some money into it but I'm so glad to have all of the space I've dreamed of.

    But sometimes it's possible to do it "right" and still stuff will happen.  I lived in a sketchy apartment for a couple of years to save and until I got a promotion; I bought the condo and a week after closing - the hot water heater explodes and floods half of the first floor!  

    And then there's the loser homeowners association I'm saddled with.  That's my advice: if buying into a HOA community, reseach and find out as much as you can, even asking people out walking their dogs or something.  

    Finally, on a very random note: I passed on the chance to buy a condo that Newt Gengrich lived in back in the 70's.  I thought that even 20-30 years later it would still take a lot of "cleansing"!  :D

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