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Its laughable that some folks are actually still considering buying a home these days - With prices in most markets dropping like lead balloons, they'll be upside down or worse within a year...

It's not so laughable if you go in super educated. Interest rates are falling faster than housing prices, and if you are a safe bet for a mortgage company -- you have a substantial down payment saved and a good credit score -- AND you plan on being in your house more than five years, it's really not so dumb. If people stopped looking at houses as cash cows that they expect to be able to tap when things get rough (leave the equity alone! don't touch it!), and more like very expensive cars, we might have a healthier approach to mortgages.

what's laughable is the one couplecouple (she making 150K and he making 60K) that have no savings for a downpayment to buy a home. And that another couple has 10K in savings but 7K in credit card debt. I guess this explains what is wrong with our country right now...

I agree that they are complete and utter morons for even thinking of buying at this time. And this article is retarded; of course the realtor "judges" are going to be pushing the "buy" approach! Their livelihoods depend on it. I can't believe one of them is still talking about 100% financing! From what I can tell, none of these people should even remotely consider buying. Why? Most of them have lots of debt and none of them have significant savings.

No wonder there's a housing crisis. Holy god. How can someone make all that money and not manage to save anything? Why is not having debt considered a huge achievement (for renters, no less!)? Who buys a boat before a house? Insane.

In SF, the rents are rising as well. If you have a down payment, it may still be a better deal to buy when you take the tax deductions into mind.

I agree that none of the people featured are even halfway prepared for homeownership. Anyone who advises those people to buy should be held personally accountable for the the real estate mess we're in. However, I just bought a condo two months ago and I feel like in many markets this is a great time to buy. My place was a steal! Houses are sitting around on the market for ages and sellers are desperate. Interest rates are extremely low. Of course... I had saved for a downpayment plus a rainy day fund and had no debt and no boat, so I guess I'm a weirdo. Who needs good credit and and home when you've got a $40,000 boat?!?!

It's obvious to me that none of these people is ready to own a home. how is it that they're in the mid to late 20s and have NO savings? Right now would be a great time to buy if they'd even planned 2 months ahead.


Re the FHA loans: I just can't imagine financing 100% of an asset that's likely to depreciate in the short term. They could be upside down in 6 months.

I disagree it's a bad time to buy. In Los Angeles rents are rising and while housing is expensive as a native whose parents have lived in their home since the early 70's I can tell you that they purchased their house for $22,000 (yes, really) and it's now in the low 500's. Granted, it's going to drop in the next year to two but in the early 90's we had a run up that dropped housing by 50% and those that stuck it out were rewarded. Housing markets are cyclical and while I totally agree that this is bad right now but it, too, will pass. Get in to a home in the next couple of years and stay there for 10 years and you'll be able to look back and see that you made a good investment at the the right time (and no, I'm not a realtor but I do own a house in Los Angeles that probably is close to being upside down. I can afford the payments and completely enjoy being a homeowner and no longer renting).

It is very hard to get a mortgage at the moment without a down payment and even then not easy...

In my case it is far cheaper to rent than to buy; I couldn't afford to buy anything near what I rent.

gig818, the price of owning vs. renting, especially in the LA area, is completely out of whack. I don't see the point of paying/mortgaging $500K (plus taxes, mello roos, maintenance, insurance) for a house that could be rented for under $2000/month. Yes, there has been a run-up over the past 5 years, but it truly was an anomaly that correlated with the huge asset bubble that is currently unwinding big time and sucking us into a recession. Now that financing is much harder to obtain, and people actually, um, have to PROVE they are able to pay back the loan, the pool of buyers has shrunken considerably. And when the pool of buyers goes down, so go the prices. As far as I am concerned, it's about time.

Justin, is that you? (pocketchange?) I guess not because the caption says you are 27! ;-) If it is, we should grab a drink!

Chaz Walters....HOT PROPERTIES. I never really understood that.

The strategy behind HOME buying should not have changed, shitty market or not.

When you look at your HOME as a BUSINESS, that is a different story.

But when you look at your home as a home and a LONG term investment and you have done your homework then what is the difference between now and 30 years ago?

Now should be better right? 20% down, the lowest interest rates...what more could you ask for?

Rentals and purchases in popular, congested areas will be higher. Just like they always have.

There will always be people who choose to be house rich and cash poor, renters or homeowners. Or there will be people somewhere in the middle, or there will be people where the opposite is true.

Nothing's changed here. Except for the fact that a bunch of "business" people figured out another way to get paid. With no concern, foresight or respect for the long term.

If the world's going to explode, how come rental prices don't go down? hmm?

I think that woman who makes $150K with excellent credit needs to think LONG AND HARD about buying a house with a boyfriend who makes less than half her salary and has a credit score "just shy of fair".

This is the typical situation for most Americans. This is why the rate of forclosures is what it is now. People jumped on the bandwagon of buying because it was beat into their head by their friends and family. Now buyers and sellers are trying to recoup. Atlanta right now is going through a HUGE condo boom and has over 6000 empty new construction condos sitting empty with no one to sell them too.

I'm a renter, and I have no debt. My rent and utilities is around $1000 and I live in the Southwest Loop/East Pilsen area in a gorgeous 110 year old jersey limestone building with over 900 sq ft of living space under 13 foot celings and 8 foot windows. And I have a private parking space. My commute to the office in the loop is 15 minutes on bike, 20 min on bus or 7 min via car. To buy something comparable in my area, with assessments, would be twice my rent not including parking with a $20,000 down payment.

My realtor and I argued about it long and hard but we agreed that renting would be most economical since I don't really care about building equity through real estate. At the rate the housing market is going, I would be better served by keeping my $25,000 savings in my money market accounts. I would be earning more through that. And there is plenty more cash in my checking.

Home ownership isn't for everyone. If I had kids, maybe I would consider it. Maybe if I hadn't lived in 5 cities in the past 10 years I could consider it. But I like the freedom that renting affords me. In the last 2 months, I have visited 2 countries and over 6 domestic cities. I don't balance my checkbook, because I don't need to. I have plenty of money since I don't have a car or a mortgage. My other bedroom is the size of my sleeping bedroom and houses almost 200 pair of high-end shoes and racks upon racks of clothes and designer luggage and bags. I eat, go, buy or get whatever I want when I want......you can keep the houses and condos......when my furnace explodes, I will be on the beach in the Philippines with a big ass gay hat on while I dial my building owner on my mobile on a long distance international call that I will be paying $1.99 a minute for. The building owner will have to come out of his pocket to pay for a new furnace....and my only worry will be which sandal should I wear that evening while I scratch the sand out of my ass.

I'm totally not bragging...just saying that what I value and what is important to you are totally different. Saving through real estate doesn't hold the same interest for me as my fast earning money markets and IRAs. I will never own a home, even if my parents gave me theirs. There's just too much drama with it.

Finding the right professionals to do the legwork is important when buying. I had realtors who were patient, great listeners, intelligent, and awesome negotiators. I shopped for a mortgage consultant who was able to get me a low-interest mortgage and goverment money for being a first-time buyer. I found a little condo I could spend my life in, located in the area I wanted to live in, and it's not breaking my bank in the least, leaving me with money to live comfortably, entertain and travel, and invest for my future. It took time and trust, but my mortgage is actually a better deal than renting would've been a year ago when I bought, and rent isnt' getting any cheaper. I'm glad a lot of advice given in the article is to wait and save--anyone who really wants a home to settle and grow old into should heed those words!

I'm not saying that these people should buy ... but if you have been researching long and hard, have a great credit history and self-discipline with your finances -- this can be a great time to buy. Of course, you would need to be content with the space for five years, plus ... but why would you want to invest in a place you only had luke warm feelings for.

The fact remains that if you take the time to educate yourself -- you can take advantage of certain situations, ie. this oncoming recession.

@Keisha Kornbread,

Did your furnace really explode? I wouldn't doubt it. My bathtub nearly fell through the floor. And my neighbor's apartment burned down.

By living in your neighborhood I was able to save money to put me in a position to buy a place (same neighborhood-West).

Have you lived in your apartment very long? My guess is that if you leave, the rent will increase substantially. By the time I left my rental I was paying $900 a month for 1000 s.f. and a yard. The day management changed hands, my place was immediately re-assessed and the rent started to increase from $700 that we had started off paying. When we moved out I have a feeling the rent had to go up to at least $1000. That was split between two people. We saved a few bucks in that time. I have a good friend to thank for getting us to move to the neighborhood in 97-98. I really feel like we got a value and a unique living experience at the same time. But living down there takes a certain amount of sacrifice.

Now, I'm getting used to the opposite to a certain degree. Less space for more money! But comparatively, it's still a value compared to other areas of the city. I can put my own hard work into the space and in return, figuratively, have more for less. All the while, I'm building equity and getting some tax incentives.

Ultimately, the decision to buy or rent should be purely a personal one because so much of it depends on where you are in your life. Do want anything tying you down? Or do you want an acre in the country? Would you rather spend your money on couture or towards a mortgage? I still ask myself these questions and wonder if "buying" was the right thing.

I think the problem in North America is that a lot of people live above their means. They spend more than they earn. That's enough to put you out of business.

Hejiri - It sounds like you are happy with your lifestyle and so am I.

Has anyone ever thought about this?

The government is about a zillion dollars in debt, right?

What is the correlation between that debt and the amount that the country is worth?

Now, what is the average American's debt?

As you can see, I don't know how to speak or think very analytically. But what I am wondering, is if the average American's debt is comparable to that of the country's debt. Basically, are we like a microcosm of the government? Does that make any sense?

Keisha Kornbread: how were you able to travel and save $25K and are young in age?
I would like to do both.

I am living in a very affordable flat in an up and coming neighborhood, I will not be like most of my late 20's/early 30's friends and buy a home. they are stuck in a mentality that was our parents (boomers) and renting is it for me. it provides the flexibility and IF i had 25k I would put it in a money market account too and NOT buy a home.

How much is a money market paying today?

art, you can track rates here.

We bought an 800 square foot 1-bedroom (with skyline views) in a lovely downtown Evanston building. Our monthly housing costs are now several hundred dollars less than they were to rent a small studio apartment (with, um, alley views) in the same neighborhood. As homeowners, we are saving money and living in a much nicer space. One of my neighbors just put her unit on the market a few days ago--it's priced under $125k and I'd recommend checking it out if you're considering buying in Evanston. I think the website is www.1585ridge.com.

So, a money market is earning about the same as the inflation rate?

Omigod. You have GOT to be kidding!? That girl, talking about the designer shoes she has and designer luggage yet you are RENTING!?

I would laugh if something happens and all those "things" are gone.

You don't own anything. At least people who have a home, own something. They get something back if something happened. I lost everything I owned in the CA fires. A few years ago. And so when I hear people brag about all their materialistic crap they have, I laugh so hard. Because that doesn't mean anything!!

You sound like the BIGGEST snob. You'll be on an island wearing some "big ass gay hat." Wow. I can't believe there are people in this world who attempt to sound smart and then use swearing as a form of communication.

All that aside, I think the people who do buy a home are happy that they own something.

I don't think people should judge so much on what people make per year.

I make probably half of what my friends make yet I am the most happy and I don't work in some cubicle.

Would I buy a place in Chicago? You bet.

Best!

@Art

No, but if it did, I wouldn't panic. My Central AC went out last summer though and it cost a pretty penny to have a new unit hauled up to the roof. There are 4 floors and all floors have 13 foot ceilings. But since I rent, it cost me NOTHING.

I have lived in East Pilsen for over 3 years. THe first 2 years, rent was $750. This past January, he raised it to $825. I was initially pissed since I felt it was too much. But then I asked friends about their rents and I was still getting a lot more for my money then they were, even living in my area.

If you want to take a look at my place you can see it here....

http://www.flickr.com/photos/7223335@N06/sets/72157594569907821/show/

AT featured it a year or two ago in a housetour.....

@ sanriofreak

I live well, but I don't waste money just because I have it. I love to travel, but I also love to get a good deal. My ticket to Germany last month was $509. My Ticket to DC last weekend was $99 nonstop on American and my hotel was $60 at the Westin. I search and find my deals.

I also live pretty modestly. I know a lot of people through work and networking since I am an administrative assistant for an investment banking firm. Part of my job is to procur places for my bankers to dine. Restaurateurs beg me to come in for dinner because they know if I have a good experience, I will be sending my bankers, clients, recruits, interns and events there. We admins have a lot of power since we are the ones who choose these sort of things.

Also, I do little things to save my coins. I turn off lights when not using them, turn off the furnace and water heaters when I am traveling, clip coupons, buy sale items in bulk, utilize public transportation, etc. I spend lots of money, but I also make sure I save alot too.

@ mharrison42

Yes, I am renting...why shouldn't I? Owning something isn't necessarily better than renting.

If anything happens to any of my stuff, there's renter's insurance. I didn't buy my shoes, clothes or accessories as investments. They are just things....so I am not bragging. I own these things. Anyone can own the stuff I have.....so how is that bragging? Sounds like you're a bit bitter.....don't blame it on me.

And who's trying to sound smart? LOL...I don't have to try to sound smart. People's opinion of me, or who they perceive me to be is totally unimportant to me. I've put myself through school graduating Summa Cumme Laude from Johns Hopkins University while working 2 jobs and being a full time student. I know who I am and I have done the work....which is why I am successful. I didn't achieve all this by worrying about what people thought about me or waiting on strangers to validate me.

You don't think people should judge so much on what people make per year, but you feel you can judge me on enjoying the fruits of my labor and the advantageous choices I have made for my life and future?

Wow... I wish I owned a condo on top of Keisha K's High Horse. ;)

Look, I bought a condo last year and don't regret it one bit. Like others have said, you have to look at the real estate market in the looong term now- this crisis too shall pass. It's all cyclical. History has proven that again and again.

And it's obviously also about how you want to live and what's import to you. I personally wanted to have a place where I could rip out the floors and lay Mexican tile if I darn well pleased. I want a place that I can really put my stamp on, and not just superficially. I guess I'm a "nester" rather than a world traveler, but that's just who I am. There's no "right" or "wrong" answer here. Just know the facts.

And nobody panic! It will just make this economic mess worse. :)

This article was stupid. The issue containing it was un-researched because it doesn't even mention great programs like the City of Chicago Mortgage program which pays 4% of your downpayment, and closing costs(I walked away from the closing with money), if you qualify.

I would say, if you can find the right deal, it's a great time to buy in Chicago(the market here hasn't suffered like it has nationally, btw). I recently bought a true loft in the west loop that I got below appraisal, and 70k$ less than the listing price.

I'm also annoyed by this comment boards "fight" of renting and buying. People seem to just want to justify their lives to each other. In the end you're all gonna die anyway and no one will care about your meaningless life! Why waste energy fighting on a dumb website!

A mortgage or rent will never tie anyone down. You can always SELL your house and renters can always wait until a lease is over, or break it - so what's the big argument?
That you can lose money by selling the house? You're losing it by renting anyway. Unless you're just incredibly dumb, you shouldn't lose 10k in a year or two if you sell your house that quick.