So, all the talk these days is about real estate—the outrageous prices, the outrageous demand, the bidding wars, how long this unheard-of-market will last—and how unfair it is to young people.
I’ve even read articles postulating that this systemic unfairness explains and perhaps even justifies some really bad millennial behavior.
Well, I’m not sure I buy the unfair idea. With absolutely no research to back up my theory, I think it’s always been the case that buying a house as a 20-something is quite the challenge—unless you are a movie star or work in Silicon Valley, in which case you buy yourself a mansion and one for your parents.
Again, I think it has always been the case that the first time out, we buy what is kindly called a “starter home.” A starter home is what we can just barely afford—not our dream home. We may not love it. We may not be proud of it. And we likely wish we could afford a better neighborhood.
So, here is where mountain living enters my story. Some 20 years ago I wrote a column entitled “What a Great Place to Be Poor!” In fact, I stated in that column that I would rather live in a teepee in the mountains than live in a poor neighborhood in the city.
Think about it! One of the great things about mountain area homes is the availability of price-diverse neighborhoods. It’s entirely possible to find a starter home sandwiched between homes of twice the value and just down the street from a multi-million dollar dream home. Forget the “poor neighborhood.” In addition, our starter homeowner will likely be warmly accepted as “mountain people” at neighborhood parties.
The discerning millennial might ask “why now?” when things are so hot. Why not wait for the market to cool off? The answer is that cooling off may only mean that prices are not going up. Trust me. Inflation will resume. The trillion dollar spending likely to come out of Washington this year almost guarantees future inflation—a homeowner’s best friend. In fact, new homeowners, more than anyone else, should be praying for rampant government spending and the resulting inflation. That will be the source of their next down payment. Just do the math! If your new $400,000 starter home goes up 10 percent in a single year (not an unheard-of inflation rate), you will have earned $40,000 in wealth… far more than you could possibly stick into a savings account. Before you know it, your $400,000 home is worth $500,000. Now your $100,000 equity can be 10 percent down on your $1,000,000 dream home. Still want to wait?
The other amazing thing about inflation and homeownership is that while the cost of everything else goes up, your single biggest expense does not! That fixed rate mortgage on your home is just that—fixed. So go ahead and be a millennial. But, you better own a home before you reach 30.
