My young, married friends stopped by my house the other day while they were out house hunting. They are in their early twenties, both with steady careers, low cost of rent, no children or any extraneous payments or outstanding debt. So I was suprised to see them so stressed out about actually being able to make a down payment.
“We looked downtown [Austin] and over in the campus area and that’s all too expensive. Then we came out here [Southwest Austin] and this is still really, really expensive,” the husband said.
“We’ll what are you looking for?” I asked.
“What we really want is a old, little fixer-upper near downtown, but they’re all way too much,” the wife lamented.
So I suggested that they rent. That was not an option. Where I saw renting as a feasible option instead of buying into a house they couldn’t afford and a way to “move up” so their savings could eventually stack up to their wants, they saw it as wasting money.
“Why would we do that when we can buy a house and make money off of it later. Renting is just like throwing away $1200 every month.”
I must admit he had a point. Real estate statistics are showing that more and more homeowners are defaulting on their underwater mortgages and going to rental properties because it would be cheaper than paying a mortgage—even though it would destroy credit for a few years. It occurred to me, though: my friends are first time homebuyers. They’re looking at the market like a fat pig.
With houses on auction, selling prices at abnormally low lows, and the First-Time Homebuyer Tax Credit, my young, married friends were thinking that now is the time to buy. Home prices will start to rise again and their investment will already be making returns. They can buy cheap and sell when the market returns to a less robust but more stable version of its former self. On top of all that, they will get $8,000 cash from the government. They were planning on taking a month long trip to Ireland on that money. So I can see now why the deal was so enticing to them.
Archive for March, 2010
Florida Ruling in Favor of Homeowners
Sunday, March 7th, 2010In my many forays out into the article/blogosphere, I have come across something that caused me some alarm. It’s an article published on HeraldTribune.com that details a scary scenario where a nation-wide mortgage lending bank, Wells Fargo, utilized dishonest declarations to take possession of a Florida man’s home and foreclose.
And now, the Florida Supreme Court is taking steps to prevent these fraudulent foreclosures by making banks go more in depth when presenting their cases for foreclosure to the court. Currently, lenders can continue with a foreclosure as long as they advertise the case in the newspaper and present an affidavit saying that they could not find the homeowner. Now lending banks are required to tell judges more about the methods used to locate the homeowner, thus protecting the homeowner’s property rights.
The homeowner in question suffered—like thousands of other homeowner—from a mortgage in default and it sounds from the article like the banks tried to take advantage. It’s nice to know that the courts are looking out for us homeowners.
The Effect of Immigration on Housing
Thursday, March 4th, 2010Going off of John McIlwain’s provocative essay about the future of housing in America (you can read it here if you like,) I thought I would do a short seminar about the effect that immigration will have on America’s housing market.
Currently, immigrants, both legal and illegal, make up around 13 percent of the overall population—that’s 40 million people. And that number is expected to triple by the year 2050. This increase isn’t only due to more immigrants coming into the U.S. Immigrants who are already here are going to have families and those U.S. born citizens will make up half of the 117 million person increase.
Historically, these immigrant communities used to reside in the urban or near urban areas—hence neighborhoods in big cities like Chinatown and Little Italy. But given the nucleus-like familial nature of Latino immigrants (who are the largest minority in the U.S. and will make up over 29% of U.S. population by 2050,) it is presumed that these families will look for a more suburban setting to accommodate their large families and very tight-knit culture. Plus, suburban housing will be a more affordable alternative to usually pricey and smaller urban options.
So what does this mean for the housing market? Well, nothing for the time being, but there is a good, good, good chance that suburban communities will see a boom in coming decades from the increase in these immigrant populations.
Something to look forward to.
