BF2S Forums Attitudes of Young Americans Bode Ill for Housing Recovery

Jay wrote:

I pay about $1600 a month for a two bedroom apartment with a 30 minute commute to work. In order to get something even remotely equivalent space-wise (with a commute twice as long) I'll have to spend at least $400k minimum, which comes out to ~$1800 a month. Plus property tax. Plus homeowner's insurance. Plus time spent landscaping. Plus money spent doing maintenance and upgrades. Owning generally sucks a big fat one and is completely pointless unless you have kids.

I could buy a $600k 2 bed apartment, or rent the one next door for $620 per week. Mortgage repayments on 600k @5% are ~$680. $60 a week is a small price to pay to end up with a massive asset at the end of 25 years counted against having literally nothing.

Also your rent will continue to rise with inflation, your repayments wont and in real terms will go down, and your asset will continue to appreciate.

Uzique The Lesser wrote:

how is someone 'saddled' with rent? you pay it, then you're free. doesn't seem like a 'saddling' to me. no commitment - or only very short-term, anyway. can up and move anytime, normally within the month's notice.

Where are you going to move to? A cardboard box or park bench, you can move all you like but you're still going to have to pay to live somewhere.

Jay wrote:

If I took the money difference between owning and renting and invested it instead, I would have far more money in the bank after 30 years than I would when I sold the house. You have to understand that when you buy a house with a mortgage you have to see the price of the home just about double to see any form of profit at all.

Take out a mortgage for $500k at 3.5% and at the end of the 30 year mortgage you've paid $805k for the home. I will have paid $305k to the bank in interest ($850/month). During that time I'll have also paid about $1k/month in property tax, another $360k. So to break even, I need to see that $500k home turn into a $1.165M home. That doesn't normally happen unless there is hyperinflation like in the 70s, or a silly housing boom like in the 00s.

If your house hasn't doubled, or even tripled in 30 years, well... you fucked up somewhere.

http://www.ironfish.com.au/images/maps/sydney.jpg
1000% increase in 30 years.

sydney is a pretty exceptional instance of the house-price rising. i think you australians forget your economic and property growth is not really replicated in many other places in the western world right now. which, good for you. but doesn't mean an american or european is stupid to not want to get shackled to a mortgage.

Uzique The Lesser wrote:

sydney is a pretty exceptional instance of the house-price rising. i think you australians forget your economic and property growth is not really replicated in many other places in the western world right now. which, good for you. but doesn't mean an american or european is stupid to not want to get shackled to a mortgage.

property values in the nice suburbs have grown more than 3 fold in the past 7 years. it was just shit was dirt cheap back in the day because we had a shitty economy until the 2000s

do you have to foot large deposits in aus, too? that's the main thing that prohibits people from settling down here: the fact that, to settle in a nice area or move into a property in a decent area, you basically need a relative to die and leave you a large amount of capital. not many people can afford to save up £50k+ to put down on a house.

UK deposit is nearer 25%. so there you go. the option for a young graduate professional in the UK are basically thus:

- work for a top graduate firm / high-paying profession, obviously located in a city (london/manchester/etc.) where property prices are very high. earn a good wage, but you must pay rent, because a) city-living is incredibly expensive, not much money to be saved; b) city-living is extremely mobile, and you may not stay in the same borough/neighourhood for long; c) hardly anyone can afford to own property in areas like london, literally some of the most expensive real-estate in the world.

or, if you want to be drunkface and not be a 'stupid renter on a bench':

- don't work for a top firm, don't chase a high-flying career, work for a provincial and parochial business out in nowheresville, making a lot less than your peers in the city, with a lot less room for promotion. nothing to do, hardly any major cultural or night-life attractions. save up for 5 years in the suburbs, here, working your job for a second-rate firm, until you can afford to put down that 25% deposit on a house that is more modestly priced in a more modest area (average first house price is about 5x average income). get a mortgage, then spend the rest of your life in that shit area. never go to the big city and live a fast-paced life. never push yourself or make use of your degree and potential. because you're being 'sensible', and tying yourself to a property, in a small industrial town in the west midlands.

okay. think me and all my friends are just going to rent for our 20's and 30's. thanks for your concern, though. i may be more interested in living a quiet life out in the country where that 25% deposit and property-owning lifestyle are affordable when i want to actually raise a family or semi-retire. fuck spending the prime of my life saving up for some bricks and mortar though.

Last edited by Uzique The Lesser (2013-07-03 06:49:47)

Jaekus wrote:

Yeah I've heard London is ridiculously expensive. So is Sydney in its better parts of course but owning property in a good suburb is certainly not a stretch for a young professional with a good career. You can own a new two bedroom apartment in a suburb like where I live (Crows Nest) for well under $1 million and be 10-15 minutes on a bus from the CBD.

Case in point - http://www.realestate.com.au/property-a … -114126671

yeah a million dollars aint shit lol.

for good places you definitely need a million+ for a three bedroom house.

A nice two bedroom apartment at $800k for a young professional couple is certainly achievable. My girlfriend's sister and her husband saved up $100k and bought an apartment for around $450k in Kangaroo Point in Brisbane (5 mins from Brisbane CBD) two years ago and are already looking to buy a second investment property. Granted the price is significantly lower but were they in Sydney paying double it's certainly doable.

Jaekus wrote:

A nice two bedroom apartment at $800k for a young professional couple is certainly achievable. My girlfriend's sister and her husband saved up $100k and bought an apartment for around $450k in Kangaroo Point in Brisbane (5 mins from Brisbane CBD) two years ago and are already looking to buy a second investment property. Granted the price is significantly lower but were they in Sydney paying double it's certainly doable.

its only possible in aus because were the only country where plumbers can pull 100k a year.

imah get on that sweet sweet welfare (i somehow qualified lawl) which will cover my portion of the rent (250 a week)

thanks mr ruddkips

That's what I mean though. London is hell expensive and I'm not going to try to argue that Sydney is somehow on par, lol.

I agree. I prefer the lifestyle of inner city life so I've long accepted that unless a significant windfall comes my way I will be renting for quite some time. I'm fairly comfortable with that though. Some people get hung up on owning property but it's never fussed me too much. Sure, there's a certain appeal to owning your own home and of course there's the investment potential but I'm not ready to be tied down to one place for the next 20+ years.

If it's your home, for sure.

Last edited by Jaekus (2013-07-03 07:35:11)

By choosing not to purchase property I'm somehow being financially irresponsible? lol

Jaekus wrote:

By choosing not to purchase property I'm somehow being financially irresponsible? lol

the only way to live your life and spend your money is PROPERTY PROPERTY PROPERTY! you must own! forget most of europe. they are too cool.