Are you a Gen Z or Millennial hoping to purchase your first home? If so, it may be a bit tougher than you realize. The current real estate market can make buying a property feel like an impossible task. With rising prices and stringent financial requirements, purchasing your first house may be more complicated than ever before.
In this post, we're going to dive into the complexities of home-buying for Millennials and Gen Z—talking about some of the common obstacles house-hunters face.
1. Building from Scratch
One user posted, “The only way I can afford to have a home at this point is if I buy raw land, harvest and process the trees to build it myself.”
Another said, “In the UK, this is more expensive than buying a brick house.”
“This is a dream for some people, but in the UK land is expensive, and we have to import/buy most of our wood because wood foraging* tree felling is illegal* without a licence because of course it is,” another commenter responded.
“With a few exceptions, those kinds of rules and regulations are common sense solutions to stop something bad from happening again, because people will take the piss when they’re allowed to do whatever they want. There’s often unintended consequences or annoying red tape, but the goal is protecting people and the environment from arseholes,” another user added.
2. Monthly mortgages
One Redditor shared, “I can afford the month to month mortgage. I cannot however afford a down payment. EDIT :- Thanks for the advice in the replies guys, but I'm not American.”
“My parents' house's mortgage is like half of rent in my area. I can afford that, and probably most of the utilities and such by myself. That being said, the price of the house has almost tripled in value since they bought it. I could probably swing the down payment by myself but would definitely make me uncomfortable. I honestly feel like I'll have to get married just to get a house,” another user added.
Another Redditor also shared some glimpse of his expertise, “This should be the top comment.
Here's a detailed example:
Wife and I bought our home in 1998 when our first child was born. The house sold for $105k, and we put $10k down.
We hadn't done anything major to the home when we cleaned it up in 2017 to secure a refinance to lower the interest rate and get cash to top off a remodel. Appraisal was $180k. That's value growth fueled fully by the loss of so many independant home builders after the market crash.
Brought the kitchen and bathroom up to modern standards (stone countertops, new cabinets and fixtures), refinished the wood floors, added a door off the dining room and a large deck. The house appraised in 2021 for $290k. Two on our street sold for over $300k last year, one of them in rough shape.
Banks here are requiring 30% down for new buyers right now. For my oldest son that is two years out of college, he would have to provide a down payment that is nearly as much as we bought the house for 25 years ago.
For a 1000 sq-ft home. Let that sink in.
A lot of small construction company owners, the kind that would build small homes, went out of business or retired after the housing crash, and the industry hasn't recovered. This has caused a greater impact for those needing starter homes, lower supply means higher prices. On top of that, renting homes is a good source of passive income, so an industry of corporations built specifically to make money off of them has grown like fungus on a rotted log in this nation.
Home values are ridiculous, down payments are ridiculous, and corporate cash offers are desirable for sellers, making the first housing purchase a nightmare for many.”
3. Property Tax
One user posted, “I’m affording the mortgage payments just fine, but the property tax is killing me.”
“My escrow just went up 120 a month due to property taxes. Shit is rough,” another user added.
A third commenter replied, “That's what people don't mention when they say you're wasting money renting instead of what you could afford with a similar mortgage payment. Insurance is the other kicker. Escrow is the hidden cost of home ownership (as well as all the maintenance and repairs.)”
One Redditor also shared, “If you weren't paying escrow, you'd still be paying that in taxes anyway. My mortgage broker tries to keep the escrow they collect nearly even with our taxes and insurance payments. They went heavy the first year and just paid me out the difference, but its been increased every year since. A landlord and homeowner still end up having to pay for the same things, mortgage (usually, but not always), taxes, insurance, and maintenance. The landlord is probably adding something for profit though because the renter is either looking for a short term deal, or doesn't have the credit to make it through the mortgage application.”
4. COVID Housing Bubble
One Redditor shared, “In 2019 I could afford the mortgage but not the down payment. Now I can just barely afford the down payment, but list prices and loan rates have shot up so much that I can't really afford the monthly payments anymore unless I go for an absolutely unlivable crapshack of a property (the sort that includes phrases like “bring your tools!” and “investment opportunity!” and “calling all contractors!” in the listing).”
Another user replied, “Honestly, I would not buy a home in this market. I'd wait for 3-5 years. COVID caused an insane housing bubble.”
“The thing that scares me is all the people who say this is a new paradigm shift and that prices will not come back down. It’s very very hard to build a house nowadays (I tried) and businesses and rich people are buying more and more of the existing inventory so the little guy owns nothing and has to rent forever at increasingly exorbitant rates,” one commenter added.
5. Injury claims
One user jokingly shared, “What sort of injury scenario are we looking at to get into a million dollar payout range? Quadriplegic? Lost limbs?”
Another added, “No loss of limbs. Pretty bad foot break. A bunch of screws and plates. 3 surgeries. Non-stop physical therapy. And a great injury lawyer.”
Another Redditor posted, “Wow, I had a similar thing in the UK, nearly 6 years into my claim and I'm looking at 30 to 60k. My solicitor warned me the UK had shit payouts compared to the USA.” One also added, “We got lucky it was Door Dash’s insurance that paid. Their max payouts are way higher than a regular person usually has.”
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