Housing

[Lindsey]

I need opinions!
Okay so Scott has been looking into buying a house. He was pre-approved before for about $250,000. Last fall he bought a brand new car and thought he'd probably be down a bit. He went to the bank yesterday and now he's down to $170,000 That can't buy anything in the city other than a run-down shack in the bad part of town. He's not really into the whole getting shot or stabbed thing so the house dream is gone.
After he told me how much he could get, I looked, and 6 minutes out of town there's a little community with rented lots for mobile homes. Some of these are GORGEOUS... way nicer than most houses under $400,000 in the city. And the mobile homes are going for about $130,000. Lot rental is $330 a month and that includes water, sewer, taxes, and road maintenance. They have large fenced yards and double garages. Most are 3 bedrooms and 2 bathrooms, with a jetted tub in the ensuite bathroom and a large walk-in closet.
So after finding all of that, I thought maybe I could do something like that for myself! Layla could have a large yard to run around and play in. It would take me just as long to drive to work from there as it does to drive across the city now. It would cost me more than what I pay for rent, but it would be invested in real estate instead of just getting thrown away to landlords.
My parents think it's a great idea since we are booming here and the city is expected to keep growing and housing prices are expected to keep going up as demand goes up (lots of job opportunities, so many people from other parts of canada affected by the recession are moving here)
BUT if I buy a place I will need to give up my dream of going to Europe this fall And by next year I may not be able to afford a house if prices continue to rise. But I don't want to put off my plans to travel, because what if I never get a chance again?
What would you do in my situation?

[Janet]

I don't know about in Canada, but here in Indiana, mobile homes decrease in value where as a stick build home would increase. We don't make the amount of money you do, there is no way we could pay a mobile home payment and then lot rent too.

[Lindsey]

Thanks for your input Janet! I'm not sure if the price of mobile homes would decrease here too. The city is expanding quickly so it would soon be part of the city, and the values may go up then. But then of course, so would lot rental. Scott and I found a few just inside the city and lot rentals were close to $600/month!
It's not that I make a whole lot of money either... The only way I could afford it is a 35 year mortgage which is what most people are taking now. Last year first time home buyers could get 40 year mortgages with no down payments, but that's not available anymore. Housing is just insanely priced and you can't get anything decent for less than $400,000. A nice family home with a big yard and garage would cost about half a million. It's just stupid! And it wasn't like this a few years ago either. With the economy being stable here, and so many job openings, everyone is coming and there's no end in sight yet. Even a 500 square foot apartment conversion is at least $200,000. It's basically impossible to buy a house without a second person.
But landlords are reaping the benefits too. If people can't afford a mortgage, they price their rental places JUST BELOW mortgage cost. Our 3 bedroom, 1 bathroom half duplex is costing us $1175 a month right now, but that was from last year's contract. Our landlord is able to raise rent again next month.
ETA: For comparison, our rent is $1175, and the mortgage + lot rental (including water bill) out there would be $1050.

[DianaB]

I don't know anything about it, Lindsey. The prices that you're quoting are so much higher than we're used to around here, especially talking about a mobile home. I think that you should talk this over with your parents, see what they think, and take their advice.

[Lindsey]

Thanks Diana. My parents were kind of pushing me to buy, but as long as I'm splitting rent here I can save enough money for Europe. I just really really want to travel. In a few years I might have a family and not have the opportunity anymore.

[gja1000]

This is just my personal opinion - but I would never take out anything more than a 15 year loan on a mobile home. Why? It won't last too much longer than 15 years, it certainly won't last 40 years - they are just not that well made. Also, with the cold weather that you have, I would not want to be in a mobile home. At least in the U.S., they are not nearly as well insulated as regular homes, so the cost to heat it will be much higher!

My opinion is that since you want to travel, and if you buy the home, you will have to give up or drastically scale back your travel plans, and you may come to hate that mobile home because that is all you can do - make the mortgage/rent payments.

I agree the housing prices are insane there! That is just awful - regular persons cannot afford a home!!! I could not afford a $250,000 mortgage and I make pretty good money as a college professor. I would continue to rent, even though you are "throwing your money away" - but you are not really, you have a nice place to live.

I would be too scared of the mobile home de-valuing - even though the area is growing - at some point the mobile home is going to decrease in value because they are not built to last forever.

I really understand your wanting your own home - everyone does, but in certain instances, it is just not possible. I think Judy just bought her first home - I bet she'll have some great advice for you too.

Good luck, Lindsay!

[Lindsey]

Thanks Gayle. It is pretty much impossible to take out anything less than a 20 year mortgage here unless you have at least a hundred thousand sitting around for a down payment. It's not that you would have the place for 40 years, but it makes the payments low enough to afford, and the bank ends up making a lot of money on interest.
The reason for getting it would to have something to live in for 2 or 3 years and maybe by that time have another somebody to buy a real house with. I would hopefully be able at that time to sell the property for close to as much as I bought it for, so I wouldn't be losing a lot of money. With renting, sure I have a nice place to live, but when I move I don't get anything back.
Oh and mobile homes up here are built well for winter I actually know one family who lives out there now, and we also have a very old mobile home as our current cabin at the lake. We do use it in winter and have a nice wood stove to keep it warm The main thing is to make sure you insulate underneath the home as well as using insulated skirting.
But... my heart is set on travel. I think I may end up spending half my paychecks on rent for the next few years.

[gja1000]

The problem with the 40 year loan and payments that you can afford is that with mobile homes that do not increase in value as quickly as homes or even lose their value, is that you are paying such a tiny amount in principle each month, that in the first few years, you owe more than the mobile home is worth. So, when you sell it, you either do not make any money, or you lose money. That happened to friends of ours. They lived in the mobile home for 3 years and it cost them $2000 to sell it.

I'm glad you are opting for travel!

[Lindsey]

Thanks again Gayle! I just told Scott everything I learned and he agreed... we're both still young and I want to travel, and he wants to still go on his winter snowboarding trips, and the longer we both wait the more we'll have paid off (his car, my college line of credit and motorbike)... and if things work out between us we may have the optioin of buying something nice together. And if it's not together, there may be other people in our lives by then. Eventually I'd hope to be married and then able to afford a nice family home on two incomes instead of just one.

[Janet]

I think Gayle's advice is good. I'm glad you're going to travel too, so much more fun...lol

[Lindsey]

lol yeah... and I'll be spending most of my weekends this summer working on fixing up my parents' new (old) cabin. So when would I even have time to enjoy a house of my own??

[DianaB]

I think that Gayle gave you some really good advice. I know that mobile homes are not a very good long term investment because they're not built to last or maintain their equity.

[Blueyes]

Originally Posted by Lindsey

Thanks again Gayle! I just told Scott everything I learned and he agreed... we're both still young and I want to travel, and he wants to still go on his winter snowboarding trips, and the longer we both wait the more we'll have paid off (his car, my college line of credit and motorbike)... and if things work out between us we may have the optioin of buying something nice together. And if it's not together, there may be other people in our lives by then. Eventually I'd hope to be married and then able to afford a nice family home on two incomes instead of just one.

Great decision