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  • snitzoid

Suck it Millennials. BTW, I'm considering renovating our kitchen haha.

OMG, as empty nesters, does our house have too much room? Is it too nice! Just kidding.

Hey, I know some of the more insensitive baby boomers may point out that by supporting Dem out-of-control spending (you know, printing money...haha) you now pay 7% for a fricken mortgage. Easy for them, I mean me, to say since already have "ours".

Hey, wait a minute. You're not considering moving back home are you?

‘It’s Never Our Time’: First-Time Home Buyers Face a Brutal Market

Unable to compete against older buyers with cash offers, younger potential buyers feel like they are never going to own a house.

By Ronda Kaysen, NY Times

Ronda Kaysen, who writes about real estate, heard from dozens of frustrated first-time house hunters in cities around the country.

Published Nov. 11, 2022

In the summer of 2020, Alexandra Elmer and her husband, Matthew, began searching for their first home. They thought their wish list was realistic: four bedrooms, two bathrooms, a yard and central air-conditioning.

It would have been a significant step up from renting their rundown Cape Cod-style house with damaged wood floors, tiny closets and a cramped bathroom in a town about 15 minutes from downtown Philadelphia.

With around $70,000 for a down payment, they thought they were in a good position to buy a house in Bucks County, Pa., close to family and Mr. Elmer’s job. But at every turn, they were outbid — including on one house that received 29 other bids, and even after they increased their budget to $650,000 from $350,000.

But as the interest rates spiked and the high home prices held, Ms. Elmer, 28, watched her dream slip away. The math no longer worked — the monthly mortgage payments were simply too high.

“It feels like it’s never our time,” said Ms. Elmer, 28, who works in private aviation, and had to delay her 2020 wedding because of the pandemic. “I’m stuck at the starting line and other people have been able to progress. I know we will eventually get there one day, but it’s hard to look to the future.”

Data collected July 2021 through June 2022Source: National Association of RealtorsBy The New York Times

For most younger Americans, the entree to homeownership, a rite of passage for many adults, has been blocked by forces beyond their control. They have been competing in a market unlike any other, one defined by the largest run-up on home prices in modern history blunted only by the steepest climb in home mortgage rates in decades. As first-time buyers scramble to cobble together money for down payments and closing costs, they are competing in a market with an anemic inventory against investors and repeat home buyers flush with cash.

First-time buyers account for the smallest share of the market in the 41 years that the National Association of Realtors has tracked such data. In the year from July 2021 to June 2022, first-time buyers accounted for just 26 percent of home buyers. Normally, they account for around 40 percent of the market. They were replaced by repeat buyers who were older, wealthier and whiter than they had been in decades, according to a recent survey by the trade association.

The share of white buyers jumped to 88 percent during the survey year, representing the largest share of white buyers since 1997. The share of Black buyers fell to 3 percent from 6 percent, and Asian/Pacific Islander buyers fell to 2 percent from 6 percent from the previous survey year. The median age for all buyers was 53 years old, the oldest they’ve been since 1981, when the association first conducted its survey.

The more years a person spends renting, the fewer years they have to build equity in a home and eventually pass that equity along to the next generation. A renter is also forever at the mercy of the mercurial rental market, with little control over what their costs will be from one year to the next.

“The combination of that equity build up, even if it’s modest, and the fact that your income generally tends to go up, but your house payments stays more or less the same, that really is a huge wealth creation engine over the long run,” said Janneke Ratcliffe, the vice president of the housing finance policy center at the Urban Institute. “So the sooner you start that journey, the more you accumulate the wealth benefits of homeownership.”

‘A Double Whammy’

Having given up on their house hunt, Ms. Elmer and her husband are now looking to rent a nicer place in Bucks County, closer to family and a shorter commute to work for Mr. Elmer, 32. The new apartment will cost them about $1,000 more a month in rent, cutting into their ability to save.

It’s another twist and disappointment in two-and-a-half years of trying times for potential home buyers. First there were the rampant bidding wars, which left buyers outdoing each other to come up with the shiniest offer — $50,000 over ask? Try $100,000 and no inspection. Rising interest rates threw cold water on those strategies, but even as the lines outside the open houses evaporate, the prices haven’t fallen enough to lessen the pain of the higher rates. About 54 percent of American renters don’t believe they will ever be able to afford to buy a home, according to a Credit Karma survey from October.

“There is a double whammy right now, it’s not just the interest rates, it’s a broader macro economy,” said Colleen McCreary, chief people officer and a consumer advocate at Credit Karma. “It’s this idea that economically things are not stable and I don’t know when that stability is coming back.”

Unsuccessful buyers are left grappling with the consequences, from the small disappointments, like wondering if you’ve wasted a year of Sundays to fruitless open houses to the existential ones, like delaying when or if you have children until you know where you’ll be living. In correspondences with The New York Times, dozens of buyers expressed a profound sense of frustration about lives on hold. They feel unmoored and uncertain, stuck waiting for the next stage in life to start.

Maria Pizano has spent a decade saving around $40,000 for a down payment, while she paid down her student loans. About three years ago, when she was finally ready to look, the pickings were slim in her price range — around $350,000 for a one-bedroom condo — in San Diego. There were a few palatable condos out there, but they were in neighborhoods where she worried about her safety, and so she kept looking. But over the last two years, as prices spiraled, Ms. Pizano watched as she was priced out of the San Diego market entirely. “I have a master’s degree, I have a graduate education and I am still priced out of literally anything,” said Ms. Pizano, 37, a marriage and family therapist.

So Ms. Pizano, originally from the Los Angeles area, set her sights north, and is considering moving to Oregon or Washington where the weather is cooler and she hopes to find homes that fit her budget. She is not familiar with the Pacific Northwest, but already she is imagining a life in a place where she can continue to work remotely and perhaps buy a $400,000 or $500,000 three-bedroom house. She is not alone, home buyers moved an average of 50 miles in search of a home in the National Association of Realtors survey year, up from 15 miles in previous years.

Ms. Pizano does not want to move to a new city on her own. So she has been trying to convince her reluctant, live-in boyfriend and is lobbying her mother and sister, who both live outside Los Angeles, to make the move with her. “They’re starting to open up to the idea,” she said. “It is such a big change and it would be such a big move from the rest of our family so it’s been a really difficult decision.”

‘An Insane Amount of Cash’

Even buyers with large budgets and significant down payments are struggling to compete against an all-cash competition. Around 27 percent of repeat buyers paid for their homes in cash, while only 3 percent of first-time buyers could make such offers in the year from July 2021 to June 2022, according to the National Association of Realtors.

James Wang and Daniel Souza are prepared to make a down payment of around $300,000, but have lost several bidding wars in San Francisco. They are not yet ready to give up on their house hunt there.Credit...Jed Jacobsohn for The New York Times

In San Francisco, Daniel Souza and his partner, James Wang, are prepared to make a down payment of around $300,000 for a two-bedroom apartment in San Francisco, but even that has not been enough. The couple has lost out on eight bidding wars in the 15 months they’ve been shopping. “What freaks me out is our down payment is essentially the price of a house where I grew up in Merced County,” in central California, said Mr. Souza, 32, an environmental planner.

Their budget was initially $1.2 million, eventually edging up to $1.7 million. But now that interest rates are up, their budget is down to $1.4 million, all while they watch friends with huge stock option packages pluck up homes more easily. “You’re competing against people who just have an insane amount of cash,” said Mr. Souza, noting that he and Mr. Wang have sometimes made an offer equal to the winning one, but lost out because it was in cash. “Our Twitter friends, they just got a massive amount of cash,” he said, referring to the recent sale of the company to Elon Musk that resulted in a windfall for shareholders. “I don’t get that in my compensation package.”

But overall, tech stocks are down, which has rattled Mr. Wang, 35, a data analyst in the tech industry. He plans to eventually sell some of his tech stocks to finance the cash down payment. But, he has spent the last few months watching the value of his portfolio fall at the same time that interest rates rise. He watches as money that he could have put into a home months ago when interest rates were low is now instead sitting in an account losing value. “That’s been stressful and anxiety-inducing,” he said.

The last year and a half of endless open houses has worn the couple down. But they see no other alternative. Nearby cities in the Bay Area are no cheaper, and San Francisco is the place they consider home. “Our lives are in San Francisco,” Mr. Souza said. “For me, growing up as a gay kid in central California, it means a lot to be able to live in certain neighborhoods of San Francisco.”

Elizabeth and William Stebner are finally under contract on a condo they found in Kew Gardens, Queens, but are afraid the deal will fall through.Credit...Michelle V. Agins/The New York Times

Fingers Crossed

For Elizabeth and William Stebner, the grueling house hunt might finally be over, but the anxiety lingers, and the process has been anything but joyful. Buying a home “was something that I was looking forward to with excitement,” Ms. Stebner said. “It should be an exciting process, a happy process.” Instead, it’s been marked by stress and uncertainty.

The couple is under contract for $727,500 for a two-bedroom condo in Kew Gardens, Queens. The deal should close in December, but they are waiting for the bank appraisal and are concerned that if it appraises for less than what they offered, the deal might fall through. Already, they’ve seen their estimated monthly payments for this apartment rise since they made an offer in August. At that time, they were preapproved for a mortgage at 4.75 percent, but by the time they had a deal, the rates had gone up to over 7.5 percent, increasing their payments by several hundred dollars a month.

“If it goes beyond that, that’s when we’re in the territory of: Can we afford this anymore?” Ms. Stebner, 35, a senior producer in advertising, said. “I don’t think we can.”

In September, the Stebners took a vacation to Italy and bought a ceramic door plate from a shop in Capri, where the couple had honeymooned. On it are hand-painted lemons and the door number of their new apartment.

But Ms. Stebner is starting to wonder if she was too optimistic when she bought it. “Are we actually going to use that?” she said. “It’s feeling unattainable.”

She will not unwrap the sign until she gets the keys to the condo.

Ronda Kaysen is a real estate reporter, based in New York. She is the co-author of “The New York Times Right at Home: How to Buy, Decorate, Organize and Maintain Your Space.” @rondakaysen

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