Young buyers hit hardest by the recession

In other words there goes you future trade up market. You can’t have a housing recovery with no buyers.

How Young Homeowners Lost Out by Buying

By Jordan Weissmann Aug 27 2012, 12:15 PM ET

Thanks to a bad economy, high debt, and a trend toward smaller urban living, the Millennials will likely be a generation of renters for years to come. Derek Thompson and I explore the consequences of that reality in our piece for this month’s Atlantic. But there’s a group of young adults we don’t talk about that deserves some attention: Those who are already homeowners.

So how has the investment turned out them? For a large portion, not well.

Last week, the real estate researchers at Zillow released their report on underwater homeowners — those who owe more on their mortgage than their house is worth — for the second quarter of 2012. They estimate that 48 percent of mortgage borrowers younger than 40 are currently underwater. It’s 39 percent among those who are 20-24 years old; 48 percent for the 25-29 cohort; and 51 percent for the 30-34 demographic. Overall, they’re more likely to be underwater than middle aged and elderly owners, a result of the fact that many Millennials were buying at the peak of the housing boom. (More commentary below the graphs).

 

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Proprietary OC Housing News home purchase analysis

1115 VISALIA Dr Costa Mesa, CA 92626

$599,000 …….. Asking Price
$599,000 ………. Purchase Price
8/24/2012 ………. Purchase Date

$0 ………. Gross Gain (Loss)
($47,920) ………… Commissions and Costs at 8%
============================================
($47,920) ………. Net Gain (Loss)
============================================
0.0% ………. Gross Percent Change
-8.0% ………. Net Percent Change
0.0% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$599,000 …….. Asking Price
$119,800 ………… 20% Down Conventional
3.60% …………. Mortgage Interest Rate
30 ……………… Number of Years
$479,200 …….. Mortgage
$110,228 ………. Income Requirement

$2,179 ………… Monthly Mortgage Payment
$519 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$150 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,848 ………. Monthly Cash Outlays

($342) ………. Tax Savings
($741) ………. Equity Hidden in Payment
$140 ………….. Lost Income to Down Payment
$170 ………….. Maintenance and Replacement Reserves
============================================
$2,074 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$7,490 ………… Furnishing and Move In at 1% + $1,500
$7,490 ………… Closing Costs at 1% + $1,500
$4,792 ………… Interest Points
$119,800 ………… Down Payment
============================================
$139,572 ………. Total Cash Costs
$31,700 ………. Emergency Cash Reserves
============================================
$171,272 ………. Total Savings Needed

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Cost of Ownership Analysis

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Nearby Foreclosures

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Comparative Market Analysis

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	$499,000 3136 COOLIDGE		0.27 miles 4 bd / 1.75 ba 1,765 Sq. Ft.
	$526,000 3133 VAN BUREN Ave Unit AE		0.33 miles 4 bd / 2.75 ba 1,875 Sq. Ft.
	$499,900 -		0.44 miles 4 bd / 1.75 ba 1,410 Sq. Ft.
	$545,000 3125 LIMERICK Ln		0.61 miles 4 bd / 2 ba 1,589 Sq. Ft.
	$573,000 3717 South SEA Clf		0.68 miles 4 bd / 2 ba 1,402 Sq. Ft.
	$540,000 2018 WEST SUMMER WIND		0.69 miles 3 bd / 2 ba 1,406 Sq. Ft.
	$675,000 2002 West SUMMER WIND		0.71 miles 3 bd / 1.75 ba 1,359 Sq. Ft.
	$492,000 1916 West WEST WIND		0.81 miles 3 bd / 2 ba 2,000 Sq. Ft.
	$475,000 2984 CROFTDON St		0.83 miles 3 bd / 2 ba 1,330 Sq. Ft.
	$515,000 1917 West WESTWIND		0.85 miles 3 bd / 2 ba 2,000 Sq. Ft.