| MARKET ROUNDUP | |
| Dow | +28.74 to 16,943.81 |
| S&P 500 | +2.89 to 1,967.57 |
| Nasdaq | +19.29 to 4,415.49 |
| 10-YR Yield | -0.012 to 2.52% |
| Gold | -$0.30 to $1,338.90 |
| Crude Oil | -$2.26 to $100.67 |
Homeownership is supposed to be the American Dream. As American as baseball, Fourth of July fireworks and fresh-baked apple pie.
But maybe not anymore, at least not to a new generation of Americans! Instead, these “Millennials” born in the early 1980s are shunning the market amid concerns about future financial stability, rising expenses and excessive debts. And who is increasingly filling the housing demand hole? Foreign investors, led by cash-rich Chinese buyers!
At least, that’s the conclusion of a fascinating pair of stories I came across today. One, from Bloomberg, bears the title “Daughter Doesn’t Buy Dad’s Cheering of U.S. Homeownership.” The other, from Housing Wire, leads with the headline “China Set to Dominate Foreign Homebuyers Market.”
First let’s look at homegrown buyers, and why they’re increasingly hesitant to buy. Bloomberg profiles Sara Stevens, the 27-year-old daughter of the Mortgage Bankers Association’s CEO. Though she is engaged to be married, and she and her fiancé have a six-figure income between them, she’s choosing to rent rather than buy.
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| Cash-rich Chinese buyers are flocking to the U.S. home market. |
Why? Here’s Bloomberg’s conclusion:
“Six years since the collapse of Lehman Brothers triggered a financial meltdown, some young adults are more risk averse and view the potential upsides of status and wealth more skeptically than before the crisis, altering the homeownership calculation. It’s more than the weight of student loans, an iffy job market and tight credit — even those who can buy are hesitant.”
Some other fascinating stats from the piece:
- First-time buyers accounted for just 27 percent of May sales, far below the long-term average of about 40 percent.
- Only 52 percent of Millennials in one poll said homeownership is an “excellent long-term investment.”
- Three-fourths of them believe the U.S. housing crisis hasn’t gone away yet, even though it’s been nine years since the peak of the bubble and almost six years since the depths of the Great Recession!
I talked about some of the issues related to the evolving attitudes toward housing in early May here in Money and Markets. And I discussed the Millennials’ student debt challenges in a separate column.
Suffice it to say these are not easily solvable. All the zero percent interest rates and QE in the world can’t change the psyches of potential buyers. Nor are they doing anything to curb the explosion in student loan debt. And that’s yet another reason why I believe the Federal Reserve’s policies are a waste of time and effort, and come with way too many negative side effects to continue pursuing.
But even as many Americans are finding the American Dream harder to pursue (or not worth the effort), foreign buyers from places like China are increasingly stepping in.
Housing Wire notes that foreign buyers purchased just over $92 billion worth of U.S. real estate in the year ending in March, up sharply from $68 billion a year earlier. A whopping 60 percent of them paid all cash, compared to one-third of domestic buyers.
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“All the zero percent interest rates and QE in the world can’t change the psyches of potential buyers.” |
Chinese buyers spent $22 billion of that total, the largest percentage by dollar volume. They now account for 16 percent of all foreign purchases, triple the level of just a few years ago. We’re still talking about a fraction of the overall volume of home sales here, mind you. But it’s the trend that’s noteworthy.
So what’s your experience? Have you been a home buyer or seller lately? If so, have you had to go up against cash-rich buyers and had a hard time as someone who is buying with a mortgage instead? Have you benefitted from an influx of foreign cash?
What about family members? Do you have kids or grandkids or nephews and cousins between the ages of 18 and 35? Are they having trouble buying a house, or choosing to rent even when they can buy? Let me know in the comment section.
| OUR READERS SPEAK |
While the European markets take a temporary breather from the week’s chaos, it’s a good time to review what you have to say about what’s going on.
Reader Fred said he thinks the European problems are very similar to what we’ve seen in the past. Not the recent past, but several decades ago! His comment: The “PIIGS slide is deflationary. Banks are VERY weak and many will collapse soon. Europe started the trouble in the late 20s. They are starting it again.”
But as for what it means for the currency markets, it looks like opinions diverge. Reader Rob J. said: “You’re on the right track buying dollars, the euro finally falling. All that money in Europe that needs a home should end up in the USA. Since Europe is very unstable at this time, watch DXY go up.”
DXY is short-hand for the Dollar Index, which tracks the dollar’s performance against a basket of foreign currencies. You can track its performance at various financial sites using different naming conventions. At Stockcharts.com, for instance, you would use the ticker symbol “$USD”.
But Reader Bernard took issue with my recent comments about the euro, claiming that fundamentals, money flows and other factors support its value. He cited a two-year chart and how the euro has risen in that time frame.
My response? I guess it all depends on your time frame. Yes, in the last two years, the euro has climbed. But it’s far, far off its peak of around 1.60 in 2008. It has also made four straight lower highs on a weekly chart since then, and appears to be rolling over.
Finally, my precise “buy” and “sell” recommendations can be found in the Safe Money Report. I didn’t have a position in the euro for a long time until April, as much as I disliked its long-term outlook. But the position I added then is already showing modest open gains, and should have a very bright future if I’m right.
So if you want to get those concrete signals, rather than just general commentary, I’d love to have you on board! Just click here. Regardless of whether you or anyone else here takes that step, please do continue to share your opinions — even when you disagree with me! — at the comment section
| OTHER DEVELOPMENTS OF THE DAY |
 As I noted earlier, European markets calmed down a bit overnight, following the stock and bond collapse at Portuguese lender Banco Espirito Santo and related companies. But the respite may prove fleeting because none of the underlying, fundamental problems there have been solved. The Wall Street Journal has a bit more on that topic here.
In other words, nothing too exciting or inspiring. Banks remain mired in the muck thanks to a lackluster mortgage market, regulatory challenges, multi-billion-dollar fines, and more.
Reminder: You can let me know what you think by putting your comments here.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
{ 40 comments }
Larry Edelson writes that ingots are a better buy because the premium is less than coins and because there are counterfeit coins out there people will be less likely to accept them. I guess I am old school and prefer the coins. I agree with the premium issue but wouldn’t ingots have the same issue regarding acceptability regarding counterfeiting? I have not had any problem in the past regarding trading in coins for cash.
BUYING, SELLING, AND DEALER FRANCHISES
When trading or buying gold bullion coins such as Maple Leafs or American Eagles, you must go through a reputable dealer to acquire them and the mark-up for this service is usually about 5% above spot on small purchases. The U.S. Mint does not sell direct to individual buyers, only dealers. Its similar to buying a new car.
All new cars must come through a licensed dealership ( the franchise). DeBeers diamonds is a similar market arrangement. Customarily, the more gold coins you buy, the lower the mark-up. It also costs you to sell to unless you do so through a private party. In that case, the price is negotiable. You can always advertise your car and sell it to a private party at generally a higher price than a car dealership would give you in a trade-in.
CHINESE PREFER SPECIFIC LOCATIONS
Not all home buyers are foreign residents (Chinese) or recent immigrants here in Glendale. Glendale, CA where I grew-up, has become predominately Armenian, Hispanic, and Filipino in the last 20 years or so. Chinese owners are not that plentiful. In addition, there are some old white folks left, but many have died-off or moved away ( out of Calif, according to Andy’s Moving Van and Storage). It has changed significantly since I left in 1973. Altogether different people and groups.
A house just up my street is a great example. It went on the market this Spring for $750,000. It generated lots of potential buyers in the first open house, so the price was quickly increased to $775,000. It eventually closed for $825,000, according to the realtor. My neighbor, Prossor (last name) bought it for his daughter.
Evidently, the best deployment of his extra cash was for residential real estate rather than the stock or bond markets. Inflation is a growing concern and stocks do not keep up as well as real estate historically in an inflationary environment. I imagine (know) this is a pertinent concern with a number of others in my neighborhood, who have acted in a similar fashion.
We elected Republicans in a majority again (1982-2009), just like in the 1920’s and they removed the important financial safeguards, moved all the media to the Conservatives and brought on another Stock Market Panic and Collapse and Depression, just like in 1929… Actually, we saw the bottom in foreclosures during Obama’s first Administration, just like we saw the same bottoms during FDR’s first Administration from 1932 forward.. Same behavior, same results…. : If history i still a guide, we will not see another Republican majority for 50 years, just as in 19321982
There is very little choice in whats on offer to American voters, both main parties are controlled from the Britain. Your vote is irrelevant to any election outcome. The vote is just eye candy, vote counting means nothing in a country that is unable to police it’s borders. Your independent republic is a joke. The parasites you elected have sold your birthright a long time ago. Your current president is a liar and a fraud. He posted a birth certificate as his own from a country that never existed at the time of his birth. Kenya was named after a British MI6 sponsored Tanzanian terrorist name Jomo Kenyatta. I have watched South Africa collapse from a self made atomic power to a third world scrounder from the richest country in the world by a long shot. Governments have no money, it belongs to private people. Politicians who promise you other peoples money are thieves. Jail them when they make the promise, it’s an intention to steal.
Print up what I said above and out it away….. This cycle has been going on for hundreds of years…… Either Hillary or Elizabeth will be the Democratic President in 2016 and things will only get better from her on out… Enjoy!…. :)
I’m a single retiree ,who rent an apartment. I’ was plannning to buy a condo or townhouse. with a cash. I’ know that ownership of house is or was an American dream.Many still think it is a good investment. In past I’ was a house owner. I’ was busy with maintenance of house and garden . The new generation can not afford to buy house, because of high student loan debts or they don’t want to buy, because of mobility issue. People forget, that besides the cost the house ,is endless investment in maintenance and taxes.Homes are also illiquid assets,when you need to sell them . What about return of your investment ?When you pay in cash, you loose deduction for taxes.I’ know it means for many security and status.As older people are downsizing,I’ came to conclusion ,that all the hassle with moving,decorating and maintaining house for person,who is not handyman is expensive and time consuming. Recently, also I’ hear more views from some rich people ,that it is not good investment and wrong time to invest,because the houses will go back downturn.
Your reader Rob L says that trends in European investing in the US. can be tracked by watching the US Dollar index. But the US$ index shows a strong and consistent negative correlation to the S&P index which suggests the opposite.
Sorry Mike but ‘Baseball’ is not American. If you read Jane Austen’s Northanger Abbey written over 200 years ago you will find in the first chapter that Jane’s heroine Catherine Morland was a frequent player of “Baseball’. I just love your analysis of financial stuff though!
Oh, did I add that all the jobs that went to China and destroyed the Middle Class came during that period of Republican domination from 1982-1009? Yep, same folks!… :(
Oh, did I add that all the jobs that went to China and destroyed the Middle Class here came during that period of Republican Domination from 1982-2009? Yep, same folks!… :(
At least the “Good Times” are returning as the Republicans are tarred and feathered after selling out the average citizen to the Conservative Ultra Wealthy (CUWs), just as they did in the 1920’s?
We know several millennial age people that took advantage of the fire-sale housing prices during the late Bush years meltdown. Followed by no-interest long term financing, they’re happy as kids that hit the lottery. History might show that those that bought at the bottom made the best investment of their lifetimes.
My family still believes in home ownership. It is difficult for me to understand why anyone would think that paying for someone else’s property is preferable to paying for your own.
Even if one ends up losing the property, at least one has the chance of being able to build upsome equity, and if unable to continue to make payments, at least has a chance to possibly be able to regain some of the investment. If not, then it is just the same as renting. In other words, as a buyer, you have a chance of recovering some of your money, as a renter, there is no chance at all of any return, and if you were unable to fulfill your rental contract, you will not get any return of your deposit and you can not gain any income in any way.
Mike, I couldn’t help but comment on banks. I’m out of State wanting to buy a couple of condo’s in Fl. The process to buy through a realtor is a verification of funds in conjunction with a purchase agreement (no more good faith deposit only) so I called my bank in fl. BAC. (15 year customer). to verify funds and guess what. After talking to 3 different people at the local bank and (3 in other States that belong to BAC) I never was able to verify funds (get a letter to the realtor) to buy those condo’s. What I know. BAC is completely disorganized orrrr, so fearful of liability no one will take any responsibility out of fear of losing their job. Sooo, I shut the deals down. The only solution is to show up in person.
Mike,
I frequently read that equity market volumes continue to decrease significantly.
Where is the best place to track current and historic volumes in the various equity markets?
Many thanks,
Don
Thanks to the Fed’s inflationary policies of printing $$ out of nothing, all asset prices are inflated, including housing, and investment returns are likewise at an all-time low. There is too much debt in the system along with falling demographic growth. All of this will eventually correct to match the diluted disposable income of Americans of all ages. I think we’re witnessing the final round of musical chairs in an economic ponzi game, the end of which will end in global wars over resources.
I am personally acquainted with a Latino who works as a janitor at my employment, but also works two other part-time jobs….the same goes for his wife. He works hard (usually does a good job of cleaning our department in about 5 minutes). His and her parents take turns watching the children, and they enjoy it. They BELIEVE in the American dream and have bought a home. The main problem with the Millenials is their poor attitudes, their lack of the values of their forefathers, and their unwillingness to put their nose to the grindstone and keep it there. The Vietnamese refugees reinstated the classic American model of industriousness and getting ahead via same decades ago, now the Latinos are starting to do the same thing, and everyone knows what the offspring of the Asian Tiger Moms are going to acheive. But the American millenials, for the most part, are just not getting it.
I suggest that the main difficulty with your analysis is the failure to separate a house from a home.
Houses may not be very good as an investment (gawd knows I ain’t done so good with a house I was forced to rent out), but houses as a home which you can own, customize, upgrade, putter, and make a nest for your family is an excellent “investment”–perhaps not in monetary terms, but an excellent investment nonetheless.
There are a great number of houses for sale not on the market, waiting for prices to rise, waiting for inflation to bail them out back up to their purchase price. The kids of 25 or under can’t even buy a car not to mention a house. Some 35’s and 40’s have moved back in with parents or relatives, unable to get a decent paying job. Some are trying to go back to school or special training. There’s not enough rentals..Builders putting up developments make selling older homes more difficult. Retired people in their 70’s to 90’s are in real trouble. Not enough nursing homes, current ones charge 5 to 10 thousand per month for tiny little apartments. It’s a sad joke with the baby boomers coming into retirement by the hundreds.
HI Mike
Recently moved back to the US (Texas) from New Zealand. They were having the same problem in Auckland with the Chinese buying up all the properties and making the housing market unaffordable to the average Kiwi. I don’t have that problem here in Texas (Ft. Worth). Big housing boom here and my wife and I currently have a house under construction. With the low tax rate here and low interest rates, we can afford a nicer house for the same money we were spending on housing before we left the US.
I am a home owner in an area (Palo Alto, CA) that has seen explosive appreciation due mainly to Chinese buyers. This was predicted at a real estate seminar I attended a couple of years ago. It’s bizarre–I live in a $1.5 million 1200 square foot tract house on a slab on a 6000 square foot lot.
With all the noise about how banks have cheated the populace in general, and all the fines that the government has levied on them there’s something that leaves me perplexed. If I were to do the things that the banks have been doing, I would be wearing a prison uniform. WHY aren’t the bankers sent to jail instead of having huge fines levied against them that in reality, the people who use the bank are really the ones who are paying?
The headlines focus on the major markets but you are correct in capturing the real essence of the real estate market. Aside from a few hot markets much of the nation is experiencing a long winter season in real estate to borrow a term from Harry Dent. Sales volume in a market I follow closely was off by more than 50% last year from the peak which interestingly was in 1987 and incredibly it is off almost 50% from last year to this year. Granted there are some exceptional circumstances why this is so but while less extreme, I understand this area is certainly not alone in posting very significant declines. The Chinese may be the hot buyers at present just as everyone thought the Japanese were poised to own the US at an earlier time. Time will tell but we could be witnessing the early phase of a greater long term trend, the decline in American supremacy. The US has squandered its many advantages by sacrificing the lower and middle class in favor of the super rich, wasting billions on dreadful overseas imperialistic wars (encouraged by the military industrial complex) and starving our youth, our educational system, our R & D, our roads and infrastructure etc. etc. Success and power went to our nation’s leaders heads (although Obama is trying his best to get us out). We now glorify our military and justify endless billions in weapons systems that sooner or later fall into the hands of our adversaries in an endless escalation of technology and warfare to no good end.
Mike, When my wife died in 2012, I put our house, in a gated community on the golf course, up for sale at a price set by the office of the listing realtor. The following 600+ days were disappointing, as each realtor pressed me to lower the price. The realtors told me the housing market was thriving, but I should also upgrade with wood floors, granite counter tops, etc.
Then I found out why my house couldn’t compete. Speculators, banks, investors, hedge funds, and yes, foreigners, who couldn’t find opportunities for income in the bond market nor in the stock market, had found ample disaster properties that could be bought below market value, using he immense amount of QE money from the Federal Reserve at near-zero percent interest. Their seductive all-cash offers were hard to refuse, and delivered 11% to the investors, when they flipped or rented the homes.
Low interest rates cause assets to increase in price be they property, stocks, bonds, etc. Low interest rate mortgages cause buyers to rent a mortgage and buy a home the price of which they can not afford. Same house….would you buy it for 100,000 dollars at 8% mortgage or buy it for 200,000 dollars at 4% mortgage?
Interesting and scary article. My wife and I recently paid off our house. We have wanted a beach home for years and saw this as a good opportunity to purchase. I have enough cash for 20% down and maybe a litttle more. Should be a cake walk. Bank laws have changed. Not only do I have to be a qualified buyer, but the place I purchase as a second home has to qualify too. The new rules make it difficult to get loans. After 6 months, we gave up. As far as young investors (I have 2), they don’t seem to be interested in being tied down to one place. I believe they will be a more mobile society than any before them.
Mike
Why don’t people want to own a house? Because you NEVER actually own the house! I live in a house that’s worth aprox $150K. My taxes are around $400 a MONTH and they only go one way.. UP.
Do landlords pay real estate taxes? Sure; but they aren’t anywhere near what a homeowner pays (on a per unit basis).
When General McAuthor ruled Japan he set up Japan government as a capitalism and it looked like the Japanese were about to conquer the world through economics. They were buying real estate throughout the world until about 25 years ago the people voted in socialism like we did 102 yeas ago and both our nations have been suffering since.
The Chinese wanting world power could see what capitalism did for us decided to give more freedom to its people to pursue there dreams as it us to be in America. Our revolution in capitalism and freedom brought on the greatest industrial revolution in the history of the world. Liberalism/progressivism/socialism/democrat I not the way to go. We use to have two parties both having both liberals and conservative; but now both parties are liberals/communist which will make us all poor people.. 1/3 of our wealthy have moved to other countries and those with businesses I other country are leaving there profits in those countries.
You are absolutely correct. We would be in this mess if people could have truly understood what these liberal/Marxists were doing. Obama being easily placed in office by their voter cheating methods and social welfare draw has given them a voice. Harry Reid and Nancy Pelosi are control the mindset of their respective groups, being promisers of the utopian society. A caged life controlled by them. Never for anyone to try to get out. Always to give yourself to them and no one else.
What complete dirtbags they are. We used to have the right to pursue happiness as we define it not them. We have the liberty to do as we see it is true. We have laws to aid in our protection, sure. But to the level of debilitating Americans from starting business or crushing corporations? That isn’t right. We have the right to life. And we want that!!
As a single senior (age 75+) I recently chose to sell. All my adult life I thought home ownership provided the security and financial stability I needed. Watching costs (property taxes, utilities and maintenance costs escalate I decided to take a loss in value (sale vs purchase price) inflated by real estate sales costs forced me into another life decision. I have since elected to rent long term into a fully furnished property with utility costs covered. Not only will this lighten my load but it will also provide a smoother and less complicated settlement of my affairs when that is needed.
Yes I give up the tax deductions associated with ownership but I also relocated to a state that has NO estate tax. Thus I’ll pay as I go, but will hopefully benefit my family in the longer run…..
I managed to get out from my underwater town home 3 years ago and haven’t been able to get back into the housing market since. I live in south florida where the market is saturated with cash buyers from South America fleeing the economic and political turmoil there. Despite being preapprovedfor a mortgage and financially sound to meet the deposits and payment requirements it’s made no difference at all with getting into a new home. Cash is king and beats most local buyers out of the market.
Well after the wall street hostile takeover of our real estate industry,and most every other industry if you have not yet figured that out. I dont know who would be stupid enough to line up next ?Noone has been arrested,so banksters can legally illegally steal your home,destroy your credit, put you out of work and destroy your life, and we did absolutely nothing wrong !
I haven’t fully recovered since 08′. My was stagnate for about 6 years. I know too many people like that. I’m currently a contract engineer. I’m definitely doing better, but to get back on my feet has been very difficult. I too have student loans and I’m 51. I’m crushed. I am paying my way out of it, but the cost of college just blew me out of the water. So a house, no way for a couple of years. Spending too much of my income paying off student loans.
Why on earth would these kids doing anything other than what I’m doing. They want to get more pay. They want to move up in the ranks faster. Of course they do. This government has propped tuition and fees up so high that it’s impossible to just easily pay the loans taken out on the education.
How much of the earnings came from the adjustment of loan loss write downs?
They took a big write down early in the loss period and now some of those loses are not as bad as the write down. Adjust the loss to a lesser number and all of sudden they “earnings”.
This needs to be included in the reporting.
People have forgotten that to buy a significant asset you would be required to put down a deposit. This old fashioned value needs to be reintroduced into our psyche and we should buy what we can afford. Cheap loans merely push up prices so this is no solution either.
Credit still comes to easy and the banks thinks customer have very short term memories with all the current advertising diatribe they churn out.
Japan in the 80’s China in the 2000’s sound familiar.
Maybe the reason also has to do with the fact that many are $50K – $75K in debt with student loans in order to get a degree in Music Theory or some other Major that is not readily employable. They end up as a manger at some fast food joint and live at home with their parents.
Saw the writing on the wall. CARealtor 30+yrs. LEFT w all cash, full price, as in condition in one of the almost grown up enclaves near Marina Del Rey. Don’t miss taxes potholes & folks crossing my borders and driving up MY health care costs. Did I mention I RAISED the asking $100K & had 2 offers within 30 days. Chinese buyers from East Coast!
I am a 51 yr old single disabled woman. Up until 3 years ago I had been chronically homeless.
I have wished to be able to own a home forever. Every place I ever lived was temporary and the time came when I just stopped unpacking any time I moved into a new place. set up the furniture and leave everything in boxes because I knew it was just temporary. Whether I was there 3 months or 3 years eventually I would get evicted for non payment of rent.There were times that I would have to choose between paying the electric bill and buying groceries. Obviously I must have terrible credit as well, goes with the territory.
Over the years since my children were born I pursued many ads saying no money down, bad credit ok. No such thing. I would be told I needed one or the other, a huge down payment to get a mortgage with poor credit or excellent credit to get a mortgage with no money down, I would be told I needed 4 revolving credit accounts for 6 months to a year. Right, who is going to give ME a credit card and what business do I have having a credit card in my income bracket.None.
In June of 2011 I moved into the last apartment I would ever live in. I had been homeless for 2 months.Sitting in the kitchen, grateful for a roof but sweating bullets because I kept the air at 85 to save money, i thought there has got to be a better way. There wasn’t.
My chronic homelessness was the result of not being able to maintain longterm employment due to my disabilities. But here I was with only one option…get a job. So I did and fortunately it is the type of job I do better at maintaining and I have stayed employed for 2 yrs.But that wasn’t going to get me a house.
Life went on.
A house for me? A long forgotten possibility.
And as March 2013 rolled around I was given an unfortunate but very welcome gift. My favorite Aunt passed away and I was told there was a package for me. I was expecting family photos and maybe a letter.The package turned out to be the paperwork to collect the life ins settlement. Not a huge settlement but not chump change either.I had enough of a down payment to overcome some of the credit issues.I let that money sit in the bank for several months trying to figure out how it was going to get a house in the neighborhood I wanted to be in. There were no houses anywhere near what I felt to be my price range,nor condos,but there was a lovely gated mobile home retirement community that would allow me in their hoa despite not being 55 because i am disabled.
So I finally took the steps to deal with me credit. I had previously rehabilitated a student loan and was current and I disputed 3 items that where removed and my Fico score went from 540 to 659. I contacted the listing agent at the community and looked at some homes and picked one out and since the home was of a certain that is to old for any financing the owner was prepared to carry the contract but they wanted a bigger downpayment than I had.So after 3 days of research I finally found someone one did mobile home financing and took the plunge. got preapproved. I said to the man are you sure,really, I am approved? He said yes. Next day he called and said sorry I cannot get you an FHA loan on a mobile because of 1 pt.But if you go with a regular house or condo will can finance you.Well that’s the end of that.
Fortunately for me my r e agent was working on something. Another client who is an investor was about to close on a property and if I wanted the house she would buy it as soon as the funds cleared on the other property and if I could come up with 7,000 more down she would finance me and we had a deal. I bought the house for 57,500,22,000 dwn at 6% for 15 yrs.
I gave my 30 day notice to my landlord that I would not be renewing my lease and it was the happiest day of my life ! I closed on Jan 9,2014.My parents and my son and his friend moved everything for me and on Jan 10,2014,my mother helped me unpack my belongings for the 1st and last time in over 15 years.My mother thought the decor from the previous owner was cheesy. Old lace curtains and an old couch in good condition that was left,Angel nightlites and hideous light fixtures that she said look like they came from the 1800’s. I said no the couch stays, the curtains stay and the lights work for now and everything is perfect. I have 2 bedrooms. Two bathrooms. A washer and dryer.A back patio and front patio. A huge RV carport that fits 4 vehicles.A lovely garden with mature landscaping.My own lot.
For me buying a home was about having a permanent residence with a cap on the costs.Had I signed a new lease the rent would have been 465.00 a month increasing yearly to take each years cost of living increase from my disability check.My mortgage,hoa fees and homeowners insurance total 466.00.My hoa fees are guaranteed not to increase more than 1% a year if at all and I don’t expect my insurance to increase as much as the rent would have.And then there is there fact that rent is forever.House payments eventually go away and that is more money for me in my old age.And that is the whole point. I am no longer chronically homeless.I have a home and a place that is mine.I have even managed to pay a few 100.00 extra towards the principal which is helpful because I need that interest money more than the investor does, it is my money and I want to keep more and pay less interest over the amortization period.Plus mobile homes do not appreciate. They depreciate and even though the land will retain or increase in value the value of the house itself goes down and I don’t like paying more for something than it is worth in the end.But the bottom line is one day that house payment will disappear.
By no means do I have a view lot,but at sundown if you are sitting on my back porch and look west, the way the house sits and the way the community sits around it the only thing you see if the horizon and a beautiful sunset.
Mission accomplished.And check this out. The central air in the house broke years ago and they just put window units in.But there was not one in the 2nd bedroom where my son had been sleeping. So the time came that a window unit needed to be purchased and I thought you know what, I have gotten this far. I have changed the way I manage my finances and I am stable now and I have bigger goals. For the 1st time in my life I will have an exceptional credit score and keep it that way. So said to myself ok I can do it,I have the money but why not apply for a credit card and sgtart establishing better credit.Now I know the way to use a credit card to build credit rather than debt. So applied for a home depot card for the heck of it. I got it. Citibank backs them and in my experience they are one of the most difficult financial institutions to obtain credit from.Now Im starting to get pre approved offers and even offers in my name at work as the manager of the business.
Home ownership an amazing journey.I got into the house and found rusty water that did not go away and I got to pay a nonlicensed lady plumber to replace the pipes in the entire house at a huge discount, total 1200.00. And I have a yard that I need to pay a landscape person to manicure. I never thought I would have a yard let alone a manicured one.I have my own washer and dryer, I don’t have walk across the street carrying laundry or pack up the car to go to the laundromat.
So for my answer I would have to say if you can pull it out of the hat why wouldn’t you ?
I would like to say that if you do decide to own a home try to buy it debt free even if it means you have to buy a smaller home. It is so nice not having the debt. If you do have debt in a home, you should try and pay off the loan as soon as possible because there is so much freedom in owning a home debt free. If you need help learning how to be debt free go to daveramsey.com who can give wonderful ideas on how to live debt free. Many years ago, we were about to buy a home in large debt, but instead decided to wait to purchase a home and save our money. We were able to pay cash. Yes, we did make some sacrifices, but it has been worth the sacrifices! Our oldest daughter married a man who had a home with a mortgage, but they in time have paid it off by setting money aside following ideas from Dave Ramsey. So if you want to buy a home, my suggestion is do it with cash!