Nerd Meets Homeownership (pt. 1)

Hey Nerds,

“Owning a home is a keystone of wealth… both financial affluence and emotional security.”

Suze Orman

Suze’s quote makes homeownership seem like a necessity. Who doesn’t want financial affluence and emotional security? Lord knows, I do. But I can tell you that as a homeowner, I definitely wouldn’t say purchasing my home has given me either. And that’s the thing, buying a home isn’t what it once was in America. Let’s take a quick look at home values since 1950:

I know some of you are like, yeah those numbers look crazy, but INFLATION! Screw inflation, let’s look at it in terms of ratio of the cost of the house versus income. So in 1950, the ratio was ~2.47x (Median Home Value/Median Household Income). So a household, if they had no other expenses, could pay off the value of their home in almost two and a half years. Looking at 2010, that ratio is now ~4.48x. That’s nearly double! It would take you two more years to pay off the home in full. Also, those homes in 1950? Yeah, we’re still buying them today. So we’re paying more for 70 year-old homes instead of new homes.

You’ve probably heard that Millennials are the worst. That they aren’t buying homes, killing off casual dining/cable TV/department stores/etc., and only eat avocado toast. Spoiler alert: Millennials aren’t that bad. Hell, I’m a Millennial. We just have very different lives these days. In the 1950s, owning a home was security because you were putting down roots and worked the same job for 50 years. I have changed employers SIX times since 2007.

Fun Fact: Millennials are sometimes defined as a person reaching young adulthood in the early 21st century. That’s nice and vague, right? Wikipedia and the Pew Research Center both give the birth years of 1981 to 1996, so let’s roll with that. That means the oldest Millennials turn 39 in 2020. Get off my lawn you youngin!

As a Millennial, let me give you my own personal account of getting to homeownership:

• 2007 – Moved to Arizona and started my first big girl job earning $35,000. I quickly learned that this is literally NO money and bills are the worst. We rent a 2-bedroom apartment next to a police station. My car is broken into within the first six months.
• 2008 – Status quo
• 2009 – I receive notice that my employer will not renew my contract at the end of June and have to hunt for a new job. By May I secure a new position working for a museum and earn $40,000. Still make literally no money and have to drive 27 miles one way to get to work. Gas averaged $2.39 a gallon. Woof.
• 2010 – Status quo
• 2011 – Roughly around this time we decide to downsize to a smaller, 1-bedroom apartment that’s ever so slightly closer to my work. We’re talking a few miles, but it’s right on the light rail and we can take that places when we want to go into Phoenix proper. This apartment building is closer to the university (read: full of college students) and our bedroom window is maybe 5 feet from the hot tub. We learn to sleep with earplugs.
• 2012 – Motor mounts go out on my automobile and I decide it’s time for a new car. I stupidly buy an actual NEW car. It costs me upwards of $18,000 and I will find out many years later has a lemon transmission… Thanks Ford.
• 2013 – I am laid off from my job. I have a car payment and my share of rent and bills. I have no reason to freak out as much as I do, but I’ve never had the pleasure of sitting at home applying for jobs each and every day, feeling like a leech. My first lay off was notice 5 months in advance and I never had a gap in paychecks. Did I have savings? Ha! No. So I had to swallow my pride, ask my parents for money, and keep my nose to the grindstone. My unemployment lasted a total of 6 weeks and I joined my NP4L at an airline. I now make $45,000 and can stop feeling guilty about the one slim turkey sandwich I had as a “splurge” during my unemployment.
• 2014 – Our airline merges with another airline and our jobs are moved to Texas. We both receive move packages (cohabitation for the win!) and we use one to move ourselves. That’s two days moving with a rental truck, my car, my NP4L’s parents, and a cat. When we get back to Texas, we rent a 2-bedroom apartment four miles from work and live with a roommate who is a coworker. So let’s check in, we’re now in our 30’s, living with a roommate, I still have a car payment, but we carpool four miles to work.
• 2015 – My NP4L buys a house that’s seven miles from work. Our roommate’s family has moved out to Texas and we are now just the two of us in a 3/2 home. While my NP4L owns the home and pays the mortgage, I pay the utilities. During this time I start saving in earnest and I pay off my car this year. Through the merger, a pay equalization, and annual raises, I’m now making over $59,000.
• 2016 – I leave the airline to go work for a hotel company. My commute is now solo and I drive 20 miles one-way, but I get a roughly 18% pay increase to $70,000 and am now a manager. I’ll take it. Plus I discover I really love the job.
• 2017 – Status quo.
• 2018 – Not status quo. We decide we want to live closer to TCU and so it’s time for me to buy a house. I buy a 1926 2/1 house for $165,000 a mile from TCU in a neighborhood that’s a predominantly minority community with 57% homeowners with just over 10,000 residents. At just under 1,200 square feet, she wasn’t well cared for by previous owners and was poorly flipped by a company that has since dissolved. (Good riddance.) By the end of the year I’ve had to buy a new car, this time used for $7,000, repair my plumbing, electrical, AC, and…wait for it…foundation. Did I mention the four car pileup I was in on the highway? Yup, that happened.
• 2019 – I didn’t mention above that with the move my new commute is now 40 miles one-way. The drive wore on me and I make the difficult decision to leave a job I loved and return to the airline. I get paid $82,600 to not be a manager and I get to carpool with my NP4L again! He’s now paying the bills, so I’m on the hook for a mortgage and car payment. We attend TCU games in all the sports.
• 2020 – Do I even need to tell you all what happened in 2020? COVID-19 happened. I make the difficult decision to voluntarily leave the airline after very elaborate analysis of whether I can continue to pay the mortgage and car payment. I can, but it’s gonna get tight. And then I get a new job in a month and I now make $85,000 to currently work from home until we return to the office…in Denton. I’m looking at a 40+ mile one-way drive again, but in less brutal traffic.

So what was the point of all of this? I wanted to show you guys that I have fought and climbed my way to homeownership over the years. We have lived modestly, constantly making the conscious decision to downsize. I’ve hustled my way from $35,000 to $85,000 in 13 years, and I still could barely afford a $165,000 home in a neighborhood that’s not even up and coming. (That’s a ratio of 1.94x, so by today’s standards I went REALLY small.) And to top it off, I had to put another $13,000+ into repairs within the first 10 months. I’ve gone on to put down another $4,000+ since then to replace my sewer mainline…all to have my property value go DOWN from 2019 to 2020.

Moral of the story, homeownership for me is neither financially affluent or emotionally secure. In fact, I regret my decision nearly every single day.

But from my pain comes lessons to share with my fellow nerds. So this is part 1 of a several part series where I share what we’ve learned from our house-buying. If after all of this you still are thinking of buying a home, stay tuned and we’ll try to help make sure you have a better experience than me.

Honestly it wouldn’t take much!

Cheers,
Head Nerd