[quote=Jazzman]^^^Not sure I follow the logic of this. FTBs are already buying the best they can afford.. The definition of trading up is buying a better, more expensive home when you are in a better position to do so. How can you bring forward the future? A low interest rate environment doesn’t mean buyers are able to save, it just means affordability is enhanced with over-inflated prices.[/quote]
Jazzman, I don’t think current prices in SD County are overinflated. In fact, in many areas, the current asking prices are less than today’s build-cost with the lot thrown in for free and certainly selling for less than current salary and interest-rate fundamentals would dictate.
However, I do agree with you and CW about recent buyers’ (who purchased at low prices and with low-interest mtgs) inability to save. I think this stems from the feeling that the property they just bought “needs everything now” and “has to be remodeled ASAP.” In addition, I believe the vast majority of the current crop of homebuying families won’t buy anything used to place inside that home. All furnishings, appliances, electronics and window and floor coverings must be new and unused, preferably in the exact model, color and style that they want. This includes the preference for new and near-new vehicles.
It’s more than a little difficult for a family to put $$ in savings every month when their consumer debt service is as high as it is and/or they spend all of their income (no matter what their income level) on consumer debt service (incl student loans) and enhancing their lifestyles (ie very expensive daycare and pre-K, private schools, HOA’s, etc). They just “grow” into the their available discretionary income, which is higher, due to low mtg rates.
There are LOTS of cheaper options for consumer goods and “lifestyle choices” which would enable young families to save money but they are unpalatable to the vast majority of homeowners who are currently in “family-raising mode.”
Yes, Jazzman, most FTB’s are already buying the best they can afford and often much more than they can afford, given all the well-known uncertainties that can befall people in this “station in life.”
