AgentIndustry News

Should millennials consider buying homes above their current earning capacity?

Trulia economist suggests that pricey mortgages in some markets experiencing strong employment gains could become more affordable over time for the young and gainfully employed
  • A Trulia blog post indicates that in some metropolitan areas, buyers who purchase a home they can't afford right now in the hopes of their salary increasing later may realize affordability within a few months or years.
  • The key? Young workers who buy in markets that are experiencing marked employment gains.

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Helping homebuyers get into high-priced mortgages they can't afford may have been at the root of the most recent mortgage crisis, but a new Trulia report suggests that buying an expensive home may actually be a good idea in some areas of the country, particularly for millennial buyers. Forget the widely accepted idea that monthly mortgage payments should stay below 31 percent of a household’s income. In a Nov. 11 blog post, “For Millennials, Buying an Unaffordable Home Isn’t Always a Bad Idea,” Trulia Housing Economist Ralph McLaughlin suggests that in some metropolitan areas, buyers who purchase a home they can't afford right now in the hopes of their salary increasing later may realize affordability within a few years -- or, in some cases, within just a few months. The key? Young workers who buy in markets that are experiencing marked employment gains, McLaughlin said. To arrive at his bold conclusions, McLaughlin projected how much income growth the average 25- ...