Should Millennials Even Bother With A Starter Home? – Chuck Barberini Real Estate

Should Millennials Even Bother With A Starter Home?

Chuck Barberini Real Estate – Barberini Robinson Real Estate Group

Check out this article that I found this morning, Neale Godfrey Forbes on-line. It is a real comprehensive look at buying a home, the market and the life cycle of home ownership. Check it out and let me know what you think.

Chuck

Housing

Neale Godfrey Contributor

The financial voice for Baby Boomers, Millennials, and their offspring

Opinions expressed by Forbes Contributors are their own.

Citing data from the Bureau of Labor Statistics, Generation Progress, a national progressive advocacy and action network for young people, portrayed a positive view of the Millennial labor market, especially those between the ages of 25 and 34. “For older Millennials, labor force participation is far higher than the national average.”

With many Millennials seemingly back at work and earning better salaries, buying a first home could be a reality for many. If you are a Millennial fitting this description, you may have already created your Pinterest board of awesome house pictures and binge-watched a zillion episodes of House Hunters. You know what that dream house looks like. You have saved for the down payment. Now you must ask yourself: Is it time to take the plunge?

The process is more complicated than it looks and it can be overwhelming to even think that the home you can afford now may not be ideal as your “forever home.” The quaint two-bedroom bungalow seems like the perfect space today, especially coming from a one-bedroom apartment, but what happens if you want kids or more room or a more desirable area? There is lots of potential to outgrow your first love-nest quickly.

Starter Home Now Or Keep Saving?

You may have guessed that I would advise you to weigh your options. Before you panic, just consider your cohorts. According to the National Association of Realtors, “…for the last three years… Generation Y/Millennials (buyers 18 to 35) is the largest share of home buyers at 35 percent.” So, many of you Millennials are actually purchasing homes. And, if you’re worried about what to buy or how long to save, consider that “The most common type of home purchased continues to be the detached single-family home.”

The Positive Side

Housing prices are now coming off of their lows and should continue to rise through 2016. Mortgage rates are also still low, but if you listen closely to Janet Yellen, they will not be low forever.

Bankrate reports the mortgage rates as of June 1, 2016 as follows: “30-year fixed, 3.81%; 15-year fixed, 3.05%; 5/1 ARM, 3.22% and 30-year jumbo, 3.76%.” According to Dan Green of The Mortgage Reports, “It’s a terrific time to buy a home. Sales are rising, supply is dropping, and prices have increased in many cities and neighborhoods. As compared to next year, today’s market may look like a bargain.”

If you guess right on that home and location, you may be making a wise investment that will build future value.

The Negative Side

Do the math. You may have saved enough for that down payment, but that is only the beginning. Closing costs, property taxes, maintenance, homeowners insurance, utilities, yard care, and painting are just some of the expenses that need to be accounted for. Shall I continue?

Redfin Corporation estimates that, “Maintenance and repairs, which homeowners can expect to [pay] total one to two percent of their mortgage costs annually.” These extra costs may not be that easy to calculate. If you are moving to the ‘burbs, for instance, you now may need one or two cars. The point is that most Americans spend about half of their income on housing and transportation, according to the Location Affordability Index.

Take A Deep Breath

The first step is to try to match your expectations with your budget. When I say, “budget,” it is your budget now and in the future. That is tough to calculate, but you have real costs to consider. If you and your partner, for instance, want to have kids and one of you will drop out of the job market to care for the child for a few years, your income will be reduced. Or, even if you both work and will need childcare, again, your budget will be affected.

Suppose your dream has been to stop working for a corporation and to become an entrepreneur? Are you willing to forego the pressure of fixed payments for a house, or your career? Only you can answer these questions.

There are tools to help you make the financial decisions. Realtor.com has a calculator to help you analyze the decision to buy or rent. They “…compare the total amount of money you would be spending over time, minus the potential value you might receive if you someday sell the property.”

The Starter House Myth

Baby Boomers can chime in on this one. Most of us got our “starter homes” and intended to live in them for only five years. In my case, five years turned into ten years and included an addition to the house. We were willing to go further out in the country to get a better deal. That meant commuting. My commute was over three hours a day. I would have made other choices if I could rewind my life, but I loved the community.

Millennials are making different life choices. Many young buyers today are looking for the proximity to urban areas. According to the Home Buyer and Seller Trends Report, many Millennials are buying older homes on the outskirts of urban areas.

The decision to buy a house is not easy. I am a believer in homeownership; however, that being said, I have cried at every loan closing when I thought about locking myself up for 30 years. (And, I came from the banking world!)

Mark Twain may have unintentionally described the plunge into home ownership best when he said, “Twenty years from now, you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.” Now, buy that starter home.

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Chuck Barberini Real Estate – Barberini Robinson Real Estate Group

Should Millennials Even Bother With A Starter Home?

 

 

 

Author: Chuck Barberini

Chuck Barberini is a Realtor with over 18 years in the business. He’s a seasoned expert who has the knowledge and ability to navigate the intricacies of the real estate business, so you don’t have to. Over the years, Chuck has worked with several industry leading real estate companies and many knowledgeable and experienced Brokers. With over a decade’s experience in the difficult and complicated world of probate real estate and inherited homes, Chuck has now joined forces with the innovative and rapidly growing EXP Realty as a Broker Associate. Chuck received his real estate license in 2001 after being encouraged by a real estate broker friend. Originally this was a part time venture, but he eventually made the switch to full time as he discovered his enthusiasm for the job as it combined his interests in housing with helping others achieve their dreams of homeownership. Having lived in the San Francisco Bay Area his entire life, Chuck has the area knowledge required to meet the needs of buyers, sellers and investors. When he’s not delivering top notch service to his clients Chuck is a family man, having been married to his wonderful wife, Tracy, for over 30 years. Together they have raised three incredible boys. When it comes to real estate, Chuck is dedicated to serving his clients with honesty and integrity. He always has their best interests in mind and prides himself on his communication and responsiveness. Chuck would love nothing more than to lend his knowledge and experience toward helping clients with their real estate endeavors, but he doesn’t simply expect their business—he only asks for a chance to interview so that he can prove Chuck Barberini Real Estate is a great fit.

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