Last week, I was talking with my grown son and his friend. We talked about home prices and what it would cost to buy a move-in-ready starter home in Mar Vista, California, north of Venice Beach. I told them that home prices would start at $1,400,000 for a home with two bathrooms. The exception might be a fixer.
My son's friend is renting a fairly new 700-square-foot one-bedroom apartment on Sepulveda Boulevard next to IHOP for $2,700 per month. That might seem crazy, but that may be the only way to live on the Westside of Los Angeles and live a lifestyle commensurate with one's earnings. Of course, many of us would rather rent a one-bedroom in an older building for $1,700 and put that extra $1,000 in the bank toward a down payment for a future purchase. Like most young people these days, saving 20% of the $1,400,000 ($280,000) by siphoning off $1,000 per month sounds impossible to my son's friend and certainly puts off gratification far longer than acceptable. The bottom line is ... in order to buy a home, you need an inheritance, a gifting parent or a winning lottery ticket.
Everyone has heard the old expression "The American dream is to own a home." It has been well known for many years and resonates well with the baby-boom generation and previous generations. Priorities seem to have changed, and millennials and Generation Z certainly have ideas of their own. Today, it is still a dream to own a home, but it is not necessarily a very top priority. Most important to people is lifestyle — their business life and social life. People seem to either be working or, if they're not working, doing something for themselves or with their kids. When they are entertaining, they're not having large dinner parties in their formal dining room, like Grandma used to do. People don't entertain at home much these days. Who wants to clean up that mess? Who wants to go shopping and deal with all the preparation?
All that said, it's still great to own a home. There is nothing like owning a home, because you can make your own decisions. You don't have a landlord telling you when you can move in and when you can move out, what color you can paint, and how you can landscape your backyard. You have a lot of freedom, a lot of control and a feeling of long-term security. You can add on, lease it out, have large parties and make custom improvements to your own taste.
Alternatively, think of the freedom people have as a renter. You don't need to worry about maintenance and expensive repairs. If you're in a financial pinch, you can just move and rent something smaller. If you want to leave the area, you just give notice to your landlord and move to another location. If you decide to take a job somewhere else, you don't have to worry about putting your home on the market; paying a broker's fee; and whether or not your home is worth more, less or the same than it was when you purchased it.
In conclusion, owning real estate has never been a smarter move. To own your personal home is a dream! But does it have to be your own home, the home you live in? Maybe you decide to go into a joint venture. Maybe you decide to buy an apartment building. Maybe you and a number of other people decide to invest in a commercial complex or a triple-net, corporate-guaranteed investment. There are many ways to invest your money in real estate. I think buying a home is the greatest thing in the world, but I'm from that era when people believed owning a home was the American dream.
Young people enjoy being liquid and able to move with little planning or risk. The average person who buys a home puts all his or her money into the down payment and remodeling the home. Many of those people have really struggled and given up vacations and dinners out. Many people who have children have really had to sacrifice and just do nothing but keep up that mortgage payment, pay their property taxes and deal with expenses that come up. There is always a time later in life when you can own a home, but these days, people often say, "I'm not ready to strap myself down and give up my play money and my freedom." Young people really want to play and enjoy living in the moment. I do my best to tell people to think of their future and plan ahead. As it stands, I still believe that owning a home is the American dream. I am very proud to tell people, "My name is Ron Wynn. I sell the American dream."
For more information, please call Ron Wynn at 310-963-9944, or email him at [email protected] To find out more about Ron and read his past columns, please visit the Creators Syndicate webpage at www.creators.com.
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