Some wanna-be homeowners are keeping their rentals in high-priced urban centers and buying second homes in more affordable suburban/rural locations.
Hopeful Homeowners Going Straight to Buying Second Home First
Ever-pricier metro areas have encouraged first-time homebuyers to think outside of the box. Rather than being endlessly frustrated by too-high home prices or being outbid multiple times on homes listed where they currently live and work, why not skip the usual first step of homeownership of buying a primary home first and go directly to buying a second home?
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Buying a home in a less expensive weekend/vacation destination while continuing to rent a primary home/apartment/condo is doable for some first-time buyers; buying a primary home in an ever-pricier metro location is not.
First-Time Homeownership Falling
According to the National Association of REALTORS® (NAR), first-time buyers are dwindling. In 2009, first-timers represented 45% of the home buying market; in January 2022, first-timers represented 27%.
According to Richard K. Green, director of the University of California Lusk Center for Real Estate, “Even if you’re being paid really well, accumulating a down payment for a million-dollar house is really hard. But you want to own somewhere, you want to get into the market.”
“Basic Economics of It”
One couple who calls Santa Monica “home” recently bought a property in the Yucca Valley on the northern edge of Joshua Tree National Park while continuing to rent in Santa Monica. Yucca Valley is among a group of communities that include Joshua Tree, Landers and Twentynine Palms. All of these communities are popular places tourists like to stay while exploring the scenic and climbing attractions and hiking and biking trails of Joshua Tree National Park.
This couple paid $517,000 for a Yucca Valley two-bedroom, one-and-a-half-bathroom house with some 2,000 square feet and panoramic views. This winning bid of $517,000 (yes, there is fierce competition to own homes in Yucca Valley) is but a fraction of what it would cost to own a home in Santa Monica with its median home price of $1.9M, according to Realtor.com.
These new Yucca Valley homeowners, both first-time buyers, who continue to rent their primary home in Santa Monica intend to renovate their new home and rent it out on Airbnb later this spring. They believe they can charge between $250 and $1,000/night, depending on the season.
Knowing that real estate is a “great” investment, one of these first-time buyers said, “It was the basic economics of it, for us.” Besides, these first-time buyers who continue renting in Santa Monica like the cultural attractions and amenities available in this highly sought after beach community combined with the quiet and spaciousness of the desert.
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Thanks to The New York Times.