I started 2019 with goals, one being my intention to enter the homebuyer’s market for the sake of my financial future following the set back of a divorce. Earlier in the year, taking those first steps to explore if home ownership was even an option, I had made my appointment with Trellis.
At my first appointment with Trellis, my counsellor explained the process and made a plan with me based on my credit report and budget. My goal for the next few months is to save, save, save and to review my situation later in the year. My counsellor explained that even if there is immediate assistance available for a down payment, Trellis wouldn’t encourage a home purchase without an emergency fund. This aligned with my trepidations about home buying, wanting to make sure I had some money aside to cover the unexpected costs of owning a property. Buying a home is not something to rush into and I have realized this even more so as I explore the homebuyers market.
I also attended the Greater Phoenix Homebuyer event back in March. The event, organized collaboratively by Trellis and the Arizona Housing Coalition, was a free learning session that aimed to educate interested home buyers on the options available to purchase a home. It was incredible to see the various sources of assistance and mortgage products available. I learned about down payment assistance programs available to households based on location and income, as well as ways people can layer assistance to maximize the help available.
One major concern for me was the cost of an additional mortgage protection payment should I chose to use down payment assistance. However, I learned that with the combination of good credit and home buyer education certifications, many lenders are willing to waive the protection insurance. Speaking to lenders at the event, I was given information about zero down mortgages should I wish to purchase without down payment assistance.
I also learned that lenders work closely with housing counseling agencies such as Trellis and the down payment assistance programs to make the whole process simple for the buyer. I came away from the event feeling positive about the support and help available.
So long as I keep working on maintaining and improving my credit score and saving, I should be in a good position to buy a home in the near future. However, applying the available support and assistance to the current housing market and my long term goals is turning out to be a little more complicated.
Essentially, the last few months of home sharing has given me the experience of low housing costs and the ability to save, which has added a new dimension to my future housing plans.
I had initially planned to use this year of room sharing to recover financially and get back on my feet before I delve into home ownership and sole occupancy. However, the financial benefits of sharing housing costs are allowing me to more comfortably meet my needs and contribute to a savings funds. This is greatly relieving compared to when I was rent burdened with a one bedroom apartment last year and struggling to get by.
This has got me thinking a lot lately about the changing landscape of housing and the choices people are making to lessen the impact of high housing costs. Home sharing comes with a cost of losing personal space, however the relief of not being burdened with high rent feels worth it.
It seems that in response to the reality many people face in affording a safe, affordable home without feeling the pinch, people are turning to housing choices that may seem unconventional.
I have friends who spend the good weather months of the year sleeping in their vans, paying a small fee to park in their friend’s driveways and use their amenities. I know people who own their homes yet rent out all of their spare rooms to cover their mortgage; allowing them to save for the future or finance more investment.
To some, these choices may seem crazy, however to others it makes sense to avoid the stress of being burdened by housing costs. I’ve also learnt that unconventional housing choice is not limited to the millennial generation, with a rise in baby boomers also choosing shared living for a fear of not having saved enough for retirement.
Personally, I can manage with the loss of my personal space for the benefit of saving money. Having to share my plates and silverware is worth it to help me fear the future less. However, paying rent to fund my landlord’s retirement isn’t ultimately my goal. If I myself can retire sitting on a property of 100% equity, I will feel satisfied and secure.
The conundrum I now face is how to I get to that 100% equity without losing my new found ability to save money through sharing housing costs. Here comes my solution; I buy a family sized home, commutable to my work and rent out my spare rooms to friends seeking an affordable housing solution. That way I am investing in property, saving money, reducing my travel costs and helping to provide affordable housing options.
After dreaming about this perfect long-term solution for myself, I proceeded to check out the current real-estate market to scope out the availability of family sized homes. And this is where I found my biggest challenge. My commutable location is Central Phoenix. The house prices in Central Phoenix have doubled since the crash, which is great for those who purchased during that time, but not so great for first time buyers wanting to reside in that area.
An overcorrecting of the housing market since the recession is causing a second-round of barriers for millennials accessing the home buying market, and it looks like I may be getting caught up in all of that. My obtainable mortgage amount is affected by the fact that my household has a sole income and I have student loan debt that is impacting my loan-debt ratio.
I simply cannot afford to purchase a family home in my commutable area and so my perfect solution will need a little innovative thinking and flexibility. Alternatively, I may have to accept some give and take and let part of my ‘perfect’ solution go.
For the time being, I am going to continue to save money, watch the housing market, obsessively work on my credit and positively consider all of my viable home buying and investment options. After all, I do love a challenge and I’m also not afraid of the unconventional.