By Ron Wynn
Recently I went out to lunch with my grown son RJ and his friend. We talked about home prices and what it would cost to buy a move-in ready starter home in Mar Vista, north of Venice. I told them that home prices would start at $1,400,000 for a home with 2 baths, which would be a minimum expectation for either of them. The exception might be a “fixer”.
I asked RJ’s friend where he was living now and what he was spending. He told me he was renting a fairly new 1-bedroom apartment on Sepulveda Boulevard, next to IHop, and is paying $2,700 per month for 700 square feet. That might seem crazy, but that’s the only way to live on the Westside and live a lifestyle commensurate with their earnings. Of course, many of us might rather rent a one bedroom in an older building for around $1,700 and put that $1,000 in the bank toward a down payment for a future purchase.
From his perspective, like most young people these days, to visualize saving 20% of the $1,400,000 ($280,000) by siphoning off $1,000 per month sounds impossible to imagine and certainly puts off gratification far longer than acceptable. The bottom line is… in order to buy a home, you need inheritance, a gifting parent or a winning lottery ticket.
Everyone has heard the old expression “The American dream is to own a home”. That expression has been well known for many years and resonates strongly with the baby boomer generation and before. Priorities seem to have changed. The Millennials and Generation Z certainly have ideas of their own.
Today it is still a dream to own a home, but it is not necessarily at the very top of priorities. Most important to people is a lifestyle; their business life and their social life. People seem to either be working these days or if they’re not working, they are doing something for themselves or with their kids. When they are entertaining, they’re not entertaining at home like grandma used to do. Grandma used to have large dinner parties; thus, the formal dining room. People don’t entertain much these days. They don’t have big dinner parties in their home. Who wants to clean up that mess? Who wants to go shopping and deal with all the preparation?
That all said, it’s still great to own a home. There is nothing like owning a home because when you own your own home you can make your own decisions. You don’t have a landlord telling you when you can move in and when you can move out, what color you can paint, and how you can landscape your backyard. You really have a lot of freedom, a lot of control and a feeling of long-term security. There is nothing better than owning your own place. You can add on, lease it out, have large parties and make custom improvements to your own taste.
Alternatively, think of the freedom that people have as a renter. You don’t need to worry about maintenance and expensive repairs. If you find out that you’re in a pinch, you can just decide to move and rent something smaller. If you decide you want to leave the area, you just give notice to your landlord and move to another location. If you decide to take a job somewhere else, you don’t have to worry about putting your home on the market, paying a broker’s fee and the worry of whether or not your home is worth more, less, or the same that it was when you purchased it.
In conclusion, owning real estate has never been a smarter move. To own your personal home is a dream! But does it have to be your own home, the home you live in? Maybe you decide to go into a joint venture, maybe you decide to buy an apartment building, maybe you decide to just go and invest with a number of other people in a commercial complex or a triple net, corporate guaranteed investment. There are many different ways to invest your money with real estate. I am not suggesting for one minute that you don’t buy a home, in fact selling homes is what I do for a living. I think buying a home is the greatest thing in the world, but I’m from that era where people believed that owning a home was the American dream.
Young people enjoy being “liquid” and able to move with little planning or risk. The average person who buys a home puts all their money into the down payment and into remodeling the home. Many of those people have really struggled and have given up many things including vacations and dinners out. Many people who have children have really had to sacrifice and just do nothing but keep up that mortgage payment, pay their property taxes and deal with expenses that come up. There is always time later in life when you can own a home, but as for these days people often say, “I’m not ready to strap myself down and give up my play money and my freedom”. Young people these days really want to “play” and they enjoy living in the moment. I do my best to tell people to think of their future and plan ahead. As it stands, I still believe that owning a home is the “American dream”. I am very proud to tell people, “My name is Ron Wynn, I sell the American dream.”