Here’s a great article from Seattle Times writer Nicole Tsong about young people who apparently value home ownership above all else.
Although Seattle-area real estate is more expensive than ever – a tiny studio at the new NoMa Ballard condo building in Seattle, for example, starts at $180,000 – it’s also more attractive than ever for young singles to buy, with cheaper conversions of apartments to condos, creative financing options and slick marketing campaigns aimed at them.
But there also is fear among young adults – and their parents – that they won’t be able to afford real estate in the future.
"There seems to be a lot more peer pressure, more parental pressure to buy at a younger age," said Warren Ballard, vice president of Williams Marketing, which sells new condos and conversions. "The attitude really has changed."
But just because more young adults are buying doesn’t mean the purchase is easy.
Young buyers are making major compromises and using creative financing to buy their first homes – including recruiting roommates or siblings, borrowing from parents, sacrificing space and living in less-desirable neighborhoods.
"Fear…that they won’t be able to afford real estate in the future." Yes, it’s definitely a good idea to make major life decisions based on fear, don’t you think? Throw that pesky logic and reason out the window and go with your gut. Yikes.
The anecdotal tales in the article are priceless:
Dawn Wiggin, 27, decided she was ready to buy her own home only weeks before she signed the paperwork for a condo in NoMa Ballard.
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But the 475-square-foot condo, priced in the low $200s, will be tough financially. The mortgage is $700 more per month than the one-bedroom apartment she’s currently renting until her condo is finished this fall.Until she bought her condo, Wiggin, a program manager, had extra spending money to travel and meet up with friends for happy hour. She also treated herself to a big vacation every year and took lots of weekend trips.
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"It’s going to be a challenge," Wiggin acknowledged. "I’ll be paying a lot more, but it’ll be fine. It’ll be a great investment."She still has several months for it to all sink in. And, she reasons, she would never save the extra $700 a month that will go to the mortgage, anyway.
"I’m just pretending I’m saving it," she said.
Thirty-one-year-old April Schiffman’s two younger sisters already own condos, and her parents felt it was time for her to do the same. They provided the financial push, offering her a down payment as long as she paid her own mortgage.
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But the purchase has made April Schiffman, a Web designer, a bit anxious."It’s a lot of responsibility," she said. "It’s not like an apartment, and you can give 30 days’ notice and move out. You’ve got to make those payments."
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"There’s no one to turn to and say, ‘Hey, somebody help,’ " she said.Her anxiety has subsided a bit since she signed the final paperwork. She plans to live in the 700-square-foot condo for at least two years, maybe more.
And she knows once she is settled into her place, the budgeting will be worth it.
"At that point, it’ll be such a habit, I’ll feel better (knowing) I have something and am building equity."
Taylor Halverson bought at a time in his life when many young adults don’t even know what career they’re headed for.He bought his 580-square-foot loft two years ago with money he had saved. With a steady job, he saw the purchase as an investment.
"You’re not paying money for nothing, i.e. rent," he said. "At the same time, you’re investing in something that gives you a reasonable return."
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He compares having a mortgage to dieting – it takes discipline and a lot of responsibility, he said.While Halverson was among the first of his friends to buy a place, he said he didn’t feel any pressure. Still, when asked what prompted him to buy at such a young age, he responded:
"Is 25 young?"
I’d be really interested to know what people who grew up in the 40’s and 50’s think about this sort of mentality. As a young person myself, I find it both amusing and frustrating at the same time that my peers are so willing to just throw caution to the wind and jump into this insane real estate market with both feet. I’d love to own a home, but it’s not so important to me that I’m willing to give up every other nice thing that I could be spending my money on. Renting isn’t "throwing away" money. It’s paying money for a service, and in the current market, it’s a dang good deal. I just don’t understand how so many people can’t seem to grasp that concept. Well, I guess I do understand… it’s called thinking with your gut instead of your head.
(Nicole Tsong, Seattle Times, 07.02.2006)