However, there's another angle to this. A starter home out in the 'burbs might be more financially attainable, but it won't build as much equity and won't appreciate as quickly as a more expensive home in a more desirable location.
Especially for a young couple starting out, I'd almost prefer to see them "stretch" a bit on the house, even if it means driving older cars and eating out less, than I'd see them skimp on the house so they can afford better cars, more leisure, more gas for their dreary long commutes, etc. Because not only is that money that you're "paying yourself" in that it builds equity, that home in the more desirable area will likely grow in value faster and higher than the less desirable area.
For example, that house I bought in 2010 was certainly a financial stretch. But if I'd been able to keep it, considering the amount in principal I'd have paid down by now (14 years later) and the increase in value of the house, I'd probably be sitting on $750-800K in equity right now. Fast forward a few years to when my youngest graduates HS, and I might be able to cash out of that house for a million or more, and go buy elsewhere in the country like utee or Badge's neighborhoods for straight cash.
You mention your $44K vs $70K decision. Any idea what the relative values of those two houses are now, 36 years later?
OK but that's a different discussion. If you're talking about financially sound young people making financially sound decisions, that's fine, I agree with you and I fully support it. But that's not what I'm getting at.
I'm addressing this idea-- this complaint-- that I consistently hear, that young people today
simply can't afford to buy a house. That it's
practically impossible for them. And the complaint is often accompanied by the accusation that people in my generation, and my parents' generation, just don't understand, because we had it so much easier.
I'm not denying that home prices seem to have outstripped inflation and that it's harder.
But I am challenging the idea that it's
impossible. The evidence cited for the plight of the young, tends to be those average home prices in any given metropolitan area, like I pulled up. But even in the Austin metro which is considered expensive nationally (though nothing like California of course), I gave an example of a home that is affordable and is perfectly reasonable and acceptable as a starter home. That was just the first one I pulled up, but in the same neighborhood there were several other houses in the $190K-$220K range. None were huge or glamorous. But all were the exact same distance from downtown Austin, that MY first house was. Around 15 miles.
So even for young people that don't want to challenge themselves or stretch, they can still invest in a starter home rather than renting. It might not be in the most desirable location-- my first home wasn't either-- but it's still
possible.
