This article is very misleading and if you are a Real estate professional I hope you don't encourage 90% financing or make it seem as though its the rule not the exception and very unlikely.

The couple in the article got 2 loans to do 90% and im sure got raped in fees and rate.

 

Also just to add in NYC for RE purchase over 1million, closing costs alone will run you $50k + for mansion tax, mortgage recording tax, title work etc. So these millenials must have some serious liquidity even at 90% LTV!

 

So now you've gone from "90% LTV jumbo loans don't exist" to "well that must have cost them a fortune" lol. There isn't anything I'm going to be able to do to convince you that these products exist. I know they do, so that'll be enough for me. If you were really interested you'd have PMed me for those names, which you haven't. They're not costly either.

Do I encourage 90% financing? I don't encourage any type of financing, I put clients in the hands of people who provide financing that fit their needs, and the financing is between them. I've used it, and would again. The subordinate financing is only to avoid PMI, I haven't done one of those since probably 2006...like I said my lenders can do it as one straight 90% loan and they can do LPMI or borrower paid MI. Would I do one with subordinate financing? Sure if it saved me money. No lender I use charges any sort of unreasonable fees, and really nowadays most real lenders are within 1/8th-1/4 point on rate and $500 or so in fees.

65% of all purchases today are made with less than 20% down. Like I said, maybe 10% of the owner occupant transactions I'm involved in are 20% down or more. Got a guy closing next week putting 5% down (not jumbo, conforming high balance) and he has a 7 figure net worth....and he's in his 50s.

The point is, people absolutely can buy houses without 20% down, and most do. Millennials will be fine as a generation, you'll see.

Closing costs here on a $1M purchase would be ~ $30k. Guess what else you can do? Get a credit from the seller and wrap them into the loan. Boom.

Again, "over $1M" is another ball game, we were talking $900-950 which is really the max to be able to do a 90% LTV jumbo, over $1M your options there get much thinner. But $750-900, 10% down all day long, no problem. $700k 90% LTV isn't even a jumbo loan today, thats a conforming high balance loan if you are in a high value area. FHA? You can do that 3.5% down up to ~ $650k.

As an exercise, lets say you buy a $900k house with a 90% LTV loan. Assuming a 4.75% rate (high), $2000 a year in insurance, $12,000 a year in taxes your monthly payment is $5,392. Lets assume a 45% backend ratio, so if a buyer had no debt they need approximately $12,000 a month in income to qualify. $144,000 a year. Now, lets say they have $3,000 a month in student loans, car payments, avacado toast payments, etc they need a monthly income of $18,700 to qualify, $224,000 a year or so. Two professionals making $120k each, can buy a $900,000 home with $90k in cash.

Now, a lot of lenders will want to see reserves of 3-6 months for that sort of loan, so they need to have ~ $140-150k in cash to their names to do it.

 

im disappointed but not surprised by the amount of disdain people on this board have for my generation. everything has already been said at this point about why millenials are the way they are.
Hope the older generation can realize that their 30 year careers at the same company and pensions are a pipe dream to most of us.

 

I want to add one thing to this before I clock out for the night.

We keep talking about $1M, and how "millennials cant buy homes". Well...the vast majority of homes don't cost $1M. I don't care where you live, I promise you even in metro NYC, you can buy a home someplace that doesn't cost $1M. I know you can, my brother in law and sister in law bought a 4000 square foot home in NJ for $750k and guess where he commutes to? NYC. In his area are homes that cost $500k, $400k...there are townhomes, there are options. I don't live in a $1M house. Next year we're actually planning on moving ourselves and selling our TH and buying a SFH. My budget is $750k, and I live in very expensive (I think #3 most expensive metro area?) Washington DC. $750k is going to get me 3500-4500 square feet, 4-5 bedrooms, .25-.5 acre lot, 2 car garage, nice updated house. Yes, I'm 20 minutes from DC (I am now). In fact, I can buy that down the street from where I am for $625k, but my wife's eyes are a little bigger than mine. Yes, I could afford to buy a $1.5M house I suppose and be 3 minutes from the DC line, or in DC, but I don't want to do that.

We have all sorts of housing available in our area. You can buy $450k houses that are nice and renovated, you can buy a nice house for $300k if you don't want to be in "Montgomery County". If we want to move from SFHs to THs, then those numbers go down. Thats the subject of this thread, millennials are buying houses in the burbs. Not sure why we're obsessed with what housing costs in NYC. Not the burbs.

So yeah, perhaps the "vast majority" of millennials will never be able to buy a $1M house. Do you realize how few people in this country are ever able to afford a $1M house in their lives? 98% of people...of ALL generations.

Like I said, millennials buy houses, and they will buy houses in larger and larger numbers. About 2% of them will be able to buy houses that cost $1M+ equivalent todays money. Sound familiar?

$450k house can be bought with $15,750 in cash and a combined income of $66,000 for a buyer with little to no debt. In metro DC that is not unattainable, even for a "millennial". Two receptionists making $35,000 can buy it. Should they? Probably not...but they can. Lets say they make $100k combined. Two young teachers, very attainable.

Get out of expensive urban areas, a $450k house is a mansion! I have clients that move away from here and move to TX, SC, TN a long list of places. They buy gorgeous homes for $250k!

So yes, millennials can buy homes...and they do...and will even moreso.

 

Ok let's not consider this thread a bash millennials one, that was certainly not my intent in starting it with that article. Quite the opposite. I'm optimistic and encouraged that there's a vibrant 'american style' demand by many millennials for a house in the burbs, kids, and a utility vehicle, but other options are just fine too... as has been mentioned, there's no one size fits all and lumping a whole birth range of people (i dislike the term 'generation' because people are being born continually) together may make for generalizations, lots of reporting and 'studies', but everyone's unique.

 

I've seen both, but more with those who are recent arrivals or been here for a few years. This has enabled prices to climb even higher, as this process shrinks inventory at the mid and high-end levels, while thirty years of open borders below shrinks inventory at the entry level. Too many people and not enough homes to go around, hence the outrageous prices for those currently looking.

 

The first part is utter nonsense. 0.8% of the US population lives in the 10 largest cities: (NYC, LA, Chicago, Houston, Phoenix, Philadelphia, San Antonio, San Diego, Dallas, San Jose). If you expand to the 100 largest you capture almost a fifth of the population, but now you're including towns like Boise and San Bernadino that have only 200k residents. Just over 10% of the population lives in a city with at least 500k residents.

That is not even remotely close to "most".

As for commuters, those statistics are harder to come by. And NYC is certainly unique in that its bounding by water and extreme density has seen it maintain a lot more jobs within the city. But in a more typical metro area like Chicago, Miami, Atlanta, or LA, less than 10% of jobs are in the city. That's 10% of jobs in that metropolitan market, not 10% of all jobs nationwide. So your second point is demonstrably false as well.

It is fair to say that the overwhelming majority of the population does NOT live in a major city like NYC.

 

What?! NYC alone is about 9 million people, which is about 3% of US population. More if you count undocumented immigrants.

Provided that you were way off in the first part of your post, you're probably way off in the 2nd part as well.

 

I would agree that "most people in the us live in a major urban area". I think the figure is like 80%.

But, not all urban areas are as expensive as NYC or Washington. Housing is way more accessible in terms of cost in most of the country than it is here.

 

Housing is mostly accessible in areas with depressed economic situation. You can buy a house in Wikles Barre, PA for 50k, but good luck getting any sort of work there. Young millennials are leaving those areas and coming to major cities in droves.

 

Those numbers don't sound promising.....3.5% down? 66k income? Rounding up, maybe a $2k/mo mortgage, not including PMI and property taxes, when a family only has a 66k income, just doesn't seem fundamentally to be a good idea. Now the property value drops, I guess they can always walk away. I've heard (I could not substantiate how this works) where a husband and wife only put the house in one spouse's name, and so when they go belly up, only one spouse is ruined by the event, and they get another house under the same terms....

edit: a colleague said she did this in Phoenix....and three times is a charm...

 

Housing doesn't have to be "$50k" to be accessible. Have you ever been to a city other than NYC? There are tons of places in this country where one can live in a major metropolitan area with good employment and a great lifestyle and have access to extremely accessible housing compared to what you have in NYC and I have in DC. Richmond, Philadelphia, Nashville, Charleston, SC, Cleveland, OH, Albany, NY, Atlanta, GA, Houston, TX (clearly huge hurricane notwithstanding), Dallas, Minneapolis it goes on and on and on. Your worldview is centered around NYC (I've seen that in other threads too) and by your own numbers, 97% of people don't live there, and don't want to. It would literally be at the bottom of the list of places I would want to live. Nice place to visit for 2 days, but live there? No thanks.

I'm not making value judgements for what people should and shouldn't do. People are saying that millennials cannot buy homes, and that you need to have a ton of cash to buy a home, I'm saying they CAN. You do not have to have a ton of cash to buy a house, even in the super expensive D.C. area.

 

Here is an article showing how much you income you need to own an home in Toronto.

https://www.thestar.com/business/rea...port-says.html

I amazed how the some of the posters on this thread do not comprehend that its harder than every to own a home in the current climate. Millennials have so much going against them compared to what buying a how was like in the late 70s, 80s, and early 90s. Home prices are just out of control compared to what real wages are what people are earning in real world dollars.

 

It is hard, especially for millennials. That doesn't mean it's not achievable though.

That's how life is, you can throw your hands up and say "it's so hard!" Or you can buckle down and do it. I bought my house when I was 25 in the D.C. area. Self employed and yeah, my wife has a $1,000+ student loan payment and at the time she made about $45k. Now she makes $0, payment is still there. Was it easy? No. Did I and do I still work really hard? Yeah.

Again, 46% of homebuyers last year were millennials, so clearly many millennials are making it happen.

Too expensive in Toronto? Leave Toronto. Who says you have to live in Toronto?! Often I wonder why the hell I live where I live lol