Young Professionals… How, Where, When to buy a home...

For the average 26 year old college graduate making 55-60k a year, buying your first home can be the most challenging yet lucrative decision you ever make. Any knowledgeable investor knows that TIME is your most valuable asset. Also, being in the right place at the right time along with a little luck is crucial to making a wise investment on any level. I have many friends who are at this stage in their lives, and they are constantly asking me what factors to consider in their first home purchase. The first issue that comes to mind is where the best place to buy might be. This search begins at what city looks to have the greatest opportunity for future growth and appreciation. It also depends what type of home you are looking for. For a condo/loft, major urban cities with job growth and limited developable sprawl land would be ideal, because that is where most vertical project development occurs. Check with the U.S. Bureau of Labor Statistics for the most current (non-preliminary) % Annual Employment Growth information. Also, considerations such as personal employment, weather, relative location to family, and overall aesthetic environment of the area are important. For example, living in San Diego has many perks….sunshine, ocean, bustling nightlife, proximity to Mexico…but it is also saturated with 20-somethings with bachelor degrees looking for a decent job. The cost of living is high, public transportation is sparse, and many people live far beyond their means just to rent a 20 x 20 studio on the beach. Alternatively, a city such as Bozeman, MT, may not be the first place a recent college grad would think to re-locate, but the region’s annual median income growth is ranked 9^th in the nation, and residential real estate development is on the rise. You may not get all the hype of So-Cal, but from an investment standpoint, you may get a lot more for your money when it comes to cost-of-living and appreciation potential.

 

Considering living in the city center or a city suburb is also an important consideration to make, as cost-of-living can offset the cost of housing under certain circumstances. If you are considering Manhattan, it is common knowledge that you will either need to have a high paying job or a lot of cash in the bank. For the first time, even six-figure professionals-and six figures puts you in the top 10th of national income rankings-are being pushed off Manhattan Island. That doesn’t fair very well for a first or second job college grad. Obviously median income is greater in Manhattan than the majority of U.S. cites, but even so, Upper West Side mortgage-broker Susan Gersh calculated that $130,000 is about the minimum income for a $600,000 apartment buyer with a 30-year mortgage-and 20 percent readily available up front for the down payment. Therefore, a prospective Manhattan homeowner not only needs to be among the top 10 percent of Americans in income, but also must have gobs of saved money, too. She also said, "If you have about $250 to $300 [thousand] in the bank, and you're buying something that costs $600,000, you're just there if you're making a buck-fifty."

 

After determining location, the next step is to determine WHEN the right time to buy will be. Then you get into mortgages, agents, down-payments, HOA fees, insurance, etc. This all of course, depends on a number of factors. So in a nutshell, I would say that there are many cities and regions in the U.S. that house residential markets which are simply too expensive for a young professional to buy a home in. Finding a pre-construction condo or loft during Phase I sales may be your best bet. Check our latest 1,200 new and pre-construction opportunities in the nation at www.newcondosonline.com.