Young, Single and Pondering Ownership
This is the story of two young men--brothers in their early 30s. Both are making handsome incomes through medical equipment sales.
The younger brother, 32, is racing up the housing ladder. In contrast, the older sibling, now 35, has yet to buy.
Why? Because the younger man bought his first home at 29 in a popular neighborhood in Newport Beach. In contrast, his older brother is still holding out for just the right moment to buy.
Because of his decisiveness, the younger man is expecting a 50% gain on the starter home he purchased three years ago. With that equity, he’s moving to a larger place in Newport.
The brothers’ mother--a real estate agent--understands why her younger son seized the chance to become a homeowner sooner.
One big reason is that he’s less averse to risk than his older sibling, said Carrie Allen, an agent for Coldwell Banker Newport Beach.
“Until you take the first step toward buying a property, you’ll never know what success may follow,” she said.
Many young singles with stable jobs fail to think through the financial implications of renting versus buying. “Single people spend a lot of time thinking about other things--like dating and traveling,” said D.J. Doss, an agent with Century 21 Automated Real Estate Center in Mission Viejo.
She tells the story of a young Orange County man who approached her for advice on a quandary he faced. He could either drain his savings account for a romantic journey to Australia to meet his girlfriend’s parents or use the money toward a down payment on a condominium.
Despite her counsel to the contrary, the young man chose the romantic sojourn. The decision proved regrettable because he broke up with the girlfriend soon after the trip. Now, several years later, he’s still a renter.
Of course, there’s no one right answer to the question of whether a young single person should use discretionary cash to rent or buy.
An individual could come to feel regret--or jubilation--after making either decision. Not only is housing appreciation an uncertain factor, but so are the social lives of many young people.
“I’m never going to twist someone’s arm on buying a home. It’s a personal choice,” said Ken Adam, sales manager for the Manhattan Beach office of Re/Max Beach Cities.
He and other realty specialists offer these three suggestions:
No. 1: Try to separate decisions about marriage and home buying.
It’s often traditional to wait until marriage (or even the birth of a first child) before seeking to purchase a home. The idea is that you don’t make a housing commitment until you “settle down.”
But Doss, the Mission Viejo agent, urges those in their 20s and early 30s to separate the issues of marriage and home buying. “Look into your financial future, no matter how young you are.”
Doss tells about a 26-year-old client, a physical therapist. The young, unmarried woman had been renting a one-bedroom, one-bath apartment for nearly five years, since graduating from college. “She felt as though she was throwing her money away on rent.”
With $3,500 she had amassed in savings--and an equal contribution from her mother--the physical therapist had the cash she needed to buy a condo of her own through a low-down-payment mortgage program.
In December, she moved into a two-bedroom, two-bath condo with 500 more square feet of living space than her rental unit --plus a view overlooking an outdoor pool. And after considering the tax savings she would derive from the deduction for her mortgage interest, the young woman is spending just $150 more a month than she did as a renter.
The woman discovered that owning her own place improved her mood--as well as her social life. “She’s ecstatic. She realized that her new place is big enough to have great parties,” Doss said.
No. 2: Take a sober look at the upkeep involved in owning a home.
Buying a detached home--particularly an older property--usually brings with it home-maintenance obligations that can steal some of the free time of a single person.
“If the plumbing backs up, you can’t just call the landlord to take care of it,” Re/Max’s Adam said.
To be sure, there are ways to minimize the burden of maintaining a home. If you buy a condo, you can expect exterior maintenance services to be provided.
Another way to reduce the upkeep duties of a homeownership is to buy a new or nearly new home. During the first few years, at least, you can count on most builders to correct construction defects.
You can also assume that your appliances and major home systems--such as heating and air conditioning--will function properly without repairs.
But if a stand-alone, single-family home is what you want, and an older property is all you can afford, plan to dedicate some of your discretionary time each month to home maintenance.
No. 3: Ask yourself whether you’re a candidate to build “sweat equity.”
The interests and lifestyle preferences of young, single adults are as varied as those of older people. While many unmarried people in their 20s and early 30s have active social and vacation schedules, others are homebodies by choice.
If you’re handy at renovation jobs, you could get a fine price on a house that needs work. One of Adam’s clients, a structural engineer “who doesn’t mind buying a ‘dog’ and fixing it up,” is seeking to do just that.
So long as he finds a property in a good location, he may make a wise investment on a home that needs a face lift. Such a property often sells for a discount of at least 10% compared with a like home in good condition.
*
Distributed by Universal Press Syndicate.