The Sugar Daddy Podcast
51: Should I Rent or Buy in Today's Housing Market?
Watch this episode in video form on YouTube: https://www.youtube.com/channel/UCP55O4Ku4dukHcK0kExhpcA
Be sure to connect with us on socials @thesugardaddypodcast we are most active on Instagram
Watch this episode in video form on YouTube: https://www.youtube.com/channel/UCP55O4Ku4dukHcK0kExhpcA
Be sure to connect with us on socials @thesugardaddypodcast we are most active on Instagram
What's the first question that you think somebody should ask themselves that's considering purchasing a home?
Speaker 2:The first question, I believe, is why do you actually want to buy a house? What is the reasoning behind wanting to make a purchase? What is the answer to that question? The reason I say that is because I feel for a lot of people that sometimes they're just trying to check the boxes off on, quote unquote, adulting.
Speaker 1:You're not a true adult if you don't own a home.
Speaker 2:Exactly, and I think that we've gotten so caught up in what has happened in previous generations and we're comparing that to now and the environment is not the same, like the options are not the same, you know, it's just not. The prices are not the same.
Speaker 1:Like, the options are not the same, but you know, it's just not.
Speaker 2:It's not an apples to apples comparison. You know, like when you hear your parents or your grandparents talk about being your age, like oh, I owned a home, that this and this and this, it's not the same, you know, especially if it's your grandparents, and then you know they're still around. They're telling you about like okay, yeah, like you bought a house for like $4,000, grandpa, like, great.
Speaker 1:Welcome to the sugar daddy podcast.
Speaker 2:I'm Jessica and I'm Brandon.
Speaker 1:And we're the Norwoods, a married millennial couple, here to help you build wealth so you can live the life you've always dreamed of. Brandon is an award-winning licensed financial planner with over 10 years of experience and millions of dollars managed for his clients all over the US. Don't worry, we leave all the intimidating finance mumbo-jumbo at the door. Stick with us as we demystify the realm of dollars. So it all makes sense. While giving you a glimpse into our relationship with money and each other, we are so glad you're here. Let's get started.
Speaker 2:Hey babe, what are we talking about today?
Speaker 1:Today we are talking about home buying and if it's a good idea.
Speaker 2:Very good topic, because right now housing prices are ridiculous.
Speaker 1:Housing prices, interest rates, all of it just feels honestly out of reach because we know that everything has gotten more expensive but our incomes have not risen to the occasion the same way. The price of everything else has gone up. I mean, what? A few weeks ago you were talking about the car wash, how it used to be $6. Now it's $10. We went I took my mom to a show at the Performing Arts Center in Durham for the Lion King, and you and I go to shows there often and parking used to be $7. Like it has been consistently $7 for the last couple of years. And then this time, when we went to the exact same garage that we always go to, it was 10. And I was like why? Why is everything going up by like actual dollars, not just like a few cents here or there? I mean actual dollars and it really has become infuriating. But I feel like for people who are looking to buy a home, it really just feels out of reach.
Speaker 2:Yeah, because I would say in the past couple of years, the increase that we've just seen in the area where we live and how home prices has, it's unprecedented, how quickly it has risen. You know almost seeing, you know a doubling and some of the home values over the course of, you know, three, four years.
Speaker 1:Right and you know, if you have bought a house and sold a house, then you've probably benefited from that. But if you're new to the market, if you're new to the area, if you're new to home buying and maybe you're looking at your first property, I mean I feel sorry for you honestly.
Speaker 2:Yeah, it's tough because if you already have money in the market, as far as you already own a home and then you're looking to purchase another one, it's not that big of a deal. But as far as being someone who's initially putting money into the market to buy a house, as Jess said, it seems very unattainable. I had met with a potential client about two weeks ago and we're going through their information and they had bought a house for around $575,000, between $545,000 and $575,000, I want to say back at the end of 2020. The house is now valued at $1.2 million.
Speaker 1:That's insane.
Speaker 2:End of 2020 to now.
Speaker 1:Wow, and you know again. That's one of those situations where it's like good for you, yeah, that's not. You don't buy a house and think, hey, I'm going to literally double the value in three to four years. But I mean, think of the equity now.
Speaker 2:They were talking about how, like I can't, I, like they're, like I could never buy this house now, well, that's the thing.
Speaker 1:Right, even you know Yahoo News and a bunch of other publications have put out that. You know they're doing all these surveys and the surveys are basically coming back as no, I could not currently afford the home that I'm in, right, because of things like that. You spent $475, let's call it $500 even and now that same house is over a million dollars. Most of us are not in a position at this stage right Again, we're elder millennials to be buying million dollar homes. If you are great to you, you clearly did something right. I don't know, maybe you're a trust fund baby. Whatever, that situation is good for you. You go boo. But most of us, if you're a normal working adult who's making it day by day, you cannot afford comfortably a $1 million plus home.
Speaker 2:I also think it's funny when we were kids and we were looking at what a million dollar home would be.
Speaker 1:Right, it's like a mansion.
Speaker 2:Yeah. And then now a million dollar home is like A shack, yeah.
Speaker 1:Well, especially depending on if you're in Seattle or California.
Speaker 2:California yeah, A million dollars.
Speaker 1:You're like buying a rundown fixer-upper at a million dollars.
Speaker 2:I saw something the other day. I don't know for the individuals out there who ever saw the movie back in the day Boys in the Hood Movie, where it takes place, obviously, as the title says, in the hood and they were showing the housing prices for the homes that were used in that movie now, and they're like seven $800,000 homes. And they're still, what Dilapidated shacks they're still tiny little things in the quote unquote hood in Compton.
Speaker 1:Oh my gosh. I mean and that's you know, that's the sad reality is it's just gotten so expensive. And so for people who are contemplating, does it make sense for me to buy a house? Do I wait? Do I purchase one now? You know our interest rate compared to the house that we sold last year more than doubled. Right, we were sitting at a cushy 2.65. Now we're at 6.125 and it hurts. And you know we were hoping that we would have been able to refinance already and unfortunately that has not been the case.
Speaker 1:But we're going to be doing some celebratory dancing when that time comes that we can, you know, hopefully get us maybe into the fours. I don't anticipate us getting back under three anytime soon, if ever. But can I get something with the four please? Because that will make a big difference on what we're paying every month because our mortgage doubled. And so, depending on the kind of lifestyle that you want do you have kids, do you not? Do you want a backyard? Do you not need one? I mean all of those things determine like is right now the time to buy a home? What kind of home? Or is renting okay?
Speaker 2:Yeah, the idea of this episode is to talk through what the thought process would be in making a determination on whether or not buying a home is right for you at this time.
Speaker 1:Yeah, so let's kick it off. What's the first question that you think somebody should ask themselves that's considering purchasing a home?
Speaker 2:The first question, I believe, is why do you actually want to buy a house? What is the reasoning behind wanting to make a purchase? What is the answer to that question? The reason I say that is because I feel for a lot of people that sometimes they're just trying to check the boxes off on quote-unquote adulting.
Speaker 1:You're not a true adult if you don't own a home.
Speaker 2:Exactly, and I think that we've gotten so caught up in what has happened in previous generations and we're comparing that to now and the environment is not the same, like the options are not the same. You know, it's just not.
Speaker 1:The prices are not the same.
Speaker 2:It's not an apples to apples comparison. You know, like when you hear your parents or your grandparents talk about being your age, like, oh, I own a home, this and this and this, it's not the same. You know this, it's not the same. Especially if it's your grandparents and they're still around, they're telling you about like okay, yeah, you bought a house for like $4,000, grandpa, great, that's one month worth of rent now.
Speaker 2:So I really want people to think through what is the reason that you are purchasing a home. Are you buying a home because it's what other people are telling you you should do, or is it something that you genuinely want to do? Because we're often also told that buying a house is an investment, and I like to kind of give some pushback on that because I think, with your primary residence, could it eventually be an investment 100%. However, initially is it. No, it's a lifestyle choice. You are choosing to purchase a home because you want certain things in your home. You know, if I've, when I've ever talked to someone who rents a house, they talk about the things that they maybe don't like about renting. The one thing is that I can't make it the way that I want to make it. I can't paint the walls that I wanted to paint them. I can't do this, I can't do that, I can't do that, and that's one of the reasons why people want to buy a house, because then they can make it their own.
Speaker 1:So I think there's also that element especially, you know, again, we're elder millennials, so if you're listening and you're in that age bracket, you've probably heard time and time again from our boomer parents Renting is throwing money away. Renting is paying somebody else's mortgage. Renting is, you know, putting money straight down the trash and you're getting nothing for it, when the reality is is you're getting a roof over your head, you're getting a place to live, you're getting honestly, you know you get a lot when you're a renter. You get flexibility. You don't have to stay put. You can choose to stay there for a year and then move somewhere else.
Speaker 1:I think also, renting is a great option if you are new to an area and you're not familiar with your surroundings. Right, what part of town do you want to be in? What grocery store do you want to frequent? What parks do you want to go to? Where's your favorite coffee shop going to be?
Speaker 1:I mean, when you buy a home, the reality is for most of us, again, if you're not like a multi-bajillionaire, you lose flexibility because you now own this home that you need to pay for, whereas if you're renting, you have flexibility.
Speaker 1:Maybe you sign a one-year lease and, hey, this didn't work out, didn't like the flow, didn't like my neighbors, the neighborhood wasn't what I wanted Guess what. You can pick up and go somewhere else. Obviously there's costs involved with moving and all of that I don't want to diminish, you know, kind of being more transient. But the idea of, hey, I'm buying a home and now I want to not live in this home next year, that's not a good financial decision. So if you are unsure if you're moving to a new area, why lock yourself into something like a quote, unquote 30-year mortgage or 15-year mortgage, and then you decide, hey, I want to move to a different state, I want to move to a different city, I want to move to a different part of town. That would not be a wise decision. So in those scenarios, renting, I think, is fantastic.
Speaker 2:I mean, I could even say that if I could go back to so. The first home that I purchased was 100% with the help of my mother, when I was 26 years old and at the time they had a first time home buyer's tax credit where essentially the money that I put for a down payment which my mom loaned to me, I got that money back in the tax credit and was able to pay it back to my mom.
Speaker 1:I did the exact same thing, yeah, yep.
Speaker 2:And I definitely, thinking back now, like I'm 100% grateful that my mama did that, but I also felt rushed because of the timing in order to purchase a home to qualify for the tax credit, when in reality, if that tax credit wasn't there and I had the actual time to just think about it, I had just recently moved back to North Carolina and a lot of change since I had left the area and I probably would have benefited more from renting and maybe finding out where I like to live better, as since things that change you know. So, honestly, if I could go back and do it, I probably would have done a little bit different.
Speaker 1:Yeah, I actually have never lived in an apartment and obviously apartment living is not the only kind of renting that you can do. But if we're thinking about home buying versus renting in an apartment building, for example, I've never actually lived in an apartment complex. And a friend of ours moved here temporarily and I went apartment shopping with him and I was blown away by how gorgeous some of these apartment complexes were. Now he's a physical therapist, makes a great income, you know all of that. So we were looking at pretty high caliber type apartments but they were gorgeous, the amenities were great, they had they had. I mean, you know there's, there's a lot of convenience in in those apartments, um, and I was like, wow, I feel like I've kind of missed out on on some of this.
Speaker 2:So and also the reality is too is that, with the current environment that we're in, before it used to be like. Obviously you had to put up the down payment for the home, but when it came to the actual mortgage payment on a monthly basis that was significantly less than renting and that was often the big draw.
Speaker 2:You had a big upfront cost but you pay less over the time, and that's not the case anymore. With interest rates being the way that they are and housing prices having increased, it is pretty much on par, if not. Mortgage is a little bit higher on average than the average rent.
Speaker 1:Well, and then from there you have to think about and I know we're going to get into that kind of financial readiness but when you pay your rent, that is what you pay, right. Whereas when you have your mortgage, you have your taxes, you have your insurance, anything that breaks is now your responsibility the moment you sign on that dotted line. If that roof collapses, if that toilet leaks, if that floorboard springs up, guess whose problem it is Yours, guess who's going to have to pay for it? You. Whereas if you are renting, you call the super and it gets fixed.
Speaker 1:I mean, there is comfort in that for sure, right? Especially if you don't have, you know, a huge emergency fund set aside for those things that inevitably will go wrong, because it's Murphy's law, right, if it can go wrong, it will, and as a homeowner, it is now your responsibility to get it fixed. And those things can be costly and they can be really frustrating. And so I think, especially, you know, maybe for a younger individual, maybe a young professional, somebody who wants to travel often, you know, renting, I think, offers that flexibility and that comfort in knowing that, hey, if my toilet doesn't work tomorrow, I can call somebody and it does not have to come out of my pocket.
Speaker 2:Yeah, I mean, like you said, it's really assessing your finances and seeing if you are financially ready to quote unquote purchase a home, because it's not just simply the known cost, your down payment, your mortgage payment. A lot of people honestly but the thing is, a lot of people don't even think about the taxes and the insurance aspect.
Speaker 1:Those are some of the most expensive things, but they don't think about it initially.
Speaker 2:They normally think about just the down payment and the mortgage, so don't think about all the other costs that are associated with owning a home. And then things breaking and then also like if you're moving into a home and you're coming from an apartment, you might need some more furniture, you might need a good washer and dryer refrigerator.
Speaker 1:The price of appliances. Can we just take a quick pause. The price of appliances right now out of control. When we sold our house last year, they asked for all of the appliances. We got them new with the house, so they were what? Four years old, going on five years, I think and we said you know, that's fine. Well, we have different setup, different space in the new house. We will leave them, work them into the price and we will purchase new. When we started looking at those appliance prices in 2023, I mean, I think my jaw is still on the floor. Like why are washers and dryers over a thousand dollars right now? Of course we're looking for certain features, but again, we're not like looking to remote into our washer with our cell phone. You know nothing crazy like that.
Speaker 2:But I think ours does have, like some wi-fi feature that we actually the refrigerator does, but it they are expensive.
Speaker 1:And then, yeah to your point, you're moving into this house. You're so excited, you want it to instantly feel like home. And guess what Making a house feel like a home is when you have to buy things. Right, that's when you're buying your decorative items and maybe new furniture, or maybe you have an extra room now and it's going to be your office or your guest room, and so you're purchasing things for that. I mean, it adds up quickly.
Speaker 2:And the thing that it goes back to is the financial planning aspect of assessing where you are currently at For looking at the money of coming in, the money of going out and assessing from there can you afford to purchase a home. And it also is not just necessarily like the process of being approved for a mortgage how much are you approved for? Because I could tell you that I think nine times out of 10, people are often approved for a larger mortgage than what they probably could comfortably afford based on their current finances. So it's not just a matter of what you're approved for. What can you afford?
Speaker 1:Yeah, we have an episode, if you want to go back, with David Cain, who is our personal mortgage broker, episode 12. It's really fantastic and he talks about getting ready to purchase a home and starting that process 12 to 18 months before you actually want to purchase. So if you're like waking up on a Tuesday and you're like you know what, I'm ready to buy a home, you're not you need to go and talk to somebody. What is that credit score looking like? What's your debt to income ratio looking like? Your credit score is going to determine your mortgage rate. The rates are already astronomical. Determine your mortgage rate. The rates are already astronomical. If your credit score is not 750 or above, it's going to be even higher, right? So that credit score is going to feed into your interest rate and that interest rate is going to make a huge difference on what that mortgage payment is, because I can tell you right now, sitting at 6.125, if we drop that down by 2%, we would be saving hundreds of dollars.
Speaker 2:And that leads into the next area. Do you understand the process of buying a home? What is the actual from start to finish process that you have to go through in order to purchase a home? And it's perfectly fine if you don't, because, in all honesty, most of the time when you're getting ready to purchase your first home, you don't thoroughly know the process. You just don't Because, in all honesty, most of the time when you're getting ready to purchase your first home.
Speaker 1:you don't thoroughly know the process. You just don't, which is why you should start that conversation early. Have your list of questions, ask your lender what do I need to be asking you? What do I need to know? Tell me what I don't know and let's work through this together and they'll have that conversation with you. That's their job.
Speaker 2:And that's why you should lean into these professionals.
Speaker 1:Yes.
Speaker 2:This is what they do for a living and you should definitely be, especially when you're a first-time homebuyer. You should definitely be working with someone that has a consultative approach. Yes, because you don't know what you don't know, so they should be teaching you along the way. Which is one of the things that I love with our lender and also our friend, david Cain, is that he has that approach. He is educating people on the process. He's not just answering your questions, he's explaining to you all the things that you don't know, that you need to know.
Speaker 1:And I think too, when you're making a big purchase, whether it's your home or your car, people will give you all sorts of advice right. Your parents, your siblings, your aunties, your uncles, everybody's got an opinion about what they went through, what their experience was, how they did it, how they wish they wouldn't have done it. Ok, that's great. Take it all with a grain of salt, you know, and go and talk to a professional they have, just like Brandon always talks about when you're you're learning or hearing about what other people are doing with their finances. That is a singular view. This is what I do. This is what I invest in. This is the 529 plan I set my child up for. The professionals have a view of a range of people right and a range of budgets and a range of scenarios, and a range of this person had this credit score, this person had this credit score. This person had this credit score. Here's what we did.
Speaker 2:Also the changing environment, because it's constantly changing.
Speaker 1:It's constantly changing and it is their job to keep up with those nuances, the changing environment, and to really understand how can we make this the best experience for your situation. So, as people are feeding you information about what they did and their mama did and their daddy did, take that with a grain of salt, thank you so much. And then lean into those professionals who are licensed in the industry, who are professionals, who are staying on top of what's happening, and lean into those people to get your answers for your specific situation, Because what your mama did might have worked 20 years ago and might have been great, but what was her credit score? What were the interest rates? What was her income to debt ratio? Right, you don't know those things in most cases. So lean into the people that you're going to be paying for this service to get the information that applies to you.
Speaker 2:And I do want to call out making sure that you are aware of the good advice versus the bad advice from you know, working with a certain person Like you should be able to you know, from a gut feeling realize that this person is the one that you should be working with, especially when they're. They should be providing you with so much more information. They shouldn't just be answering the questions that you ask. They should be providing you with so much more information. They shouldn't just be answering the questions that you ask. They should be providing you with so much more information, because it is a complicated process and, depending on your situation, there's a variety of ways to do things.
Speaker 2:So the one example I'm going to use is that my mom has bought several homes over the year, but the last home that she bought, we were working with someone new that we had never worked with before and they were not a good lender Terrible experience. They were not a good mortgage broker. It was a very bad experience and I'm just going to break it down to the fact that my mother is retired so she doesn't quote unquote have a W-2 income coming in.
Speaker 2:But she is perfectly fine, Her net worth is very nice and she's taken care of, she's done a good job for herself. And the lender was essentially trying to tell us that she cannot qualify for the mortgage for the home that she was looking to purchase because she doesn't have enough quote unquote income coming in, when literally my mom could have paid for the house in cash and still had plenty of money. And I was like this doesn't seem right, there has to be another process, another way to qualify her for the mortgage. And she kept going back and forth to me saying that I don't know what I'm talking about and I was like I'm just going to go ahead and talk to the person above you. And once I talked to the person above and explain what was going on, one day it was done.
Speaker 1:Yeah.
Speaker 2:So it's very important to make sure that you find the right people and, like I said, we have a plethora. We have our mortgage lender that we can, you know, recommend and, depending on whether states you live in, we might know somebody else that may be able to work in that state as well.
Speaker 1:So that was my little.
Speaker 2:You know two cents about that.
Speaker 1:I think. Uh, two, one of the things that, um, I think David in particular is really good at and I think any good mortgage lender, mortgage broker, mortgage broker would be good at this is breaking down your scenario. For example, when we purchased our previous home that we sold in 2023, when we purchased it in 2018, we put down 20% and we didn't have PMI, or did we? No, I think we put down 10% and then, because the home values went up so much, the PMI rolled off.
Speaker 1:Yeah, okay, but with this house, the current house, we put down the minimum, because putting down the 20% would have cost us close to a hundred thousand dollars. Um, and our PMI is like $90 a month. So it didn't make sense, as we ran the numbers, it didn't make sense to lose, quote unquote, lose almost $80,000, $90,000 in cash that we could have used. We purchased some new furniture, I mean, there was expenses that we incurred because this house is bigger and we have a nice big yard, et cetera, et cetera. And so we decided to stay as liquid as possible, and $90 a month to us is a better option in having PMI than shelling out $90,000.
Speaker 1:But again, what would our parents say? No, don't pay PMI, you don't want PMI. Well, what's the big deal, what's the stigma with PMI? Private mortgage insurance is what that stands for, and I'd rather spend $90 a month. We're not going to live in this house for 10 years, for 20 years, definitely not for 30 years. So me spending $90 a month for a couple of years, but keeping thousands of dollars liquid, just made more sense. And so, again, that was unique to our scenario, and those are the types of conversations that you can have with your lender to figure out what does make the most sense. What would they recommend?
Speaker 2:Yeah, I mean, that's exactly what it is is being able to work with someone who's able to tailor to your specific situation and then also give you options.
Speaker 1:Options.
Speaker 2:I love my options Normally, if you're sitting down with a lender and they only have one option for you. You probably need to go with another lender.
Speaker 1:Yes.
Speaker 2:Because there's normally a variety of options and they have pros and cons for each one.
Speaker 1:And if you're not getting options, get a second opinion, Like you don't need to stick with one person.
Speaker 2:I mean in my we did that our first time because with the house that we bought previously to this, the neighborhood that we bought in. They had a preferred lender and we got some perks and benefits of working with a preferred lender. But then we also talked to our own lender that we used before David and he was like no, this is a good deal.
Speaker 1:He actually said go with the preferred lender, because I can't match this, Whereas in this new situation, we gave him the options of what the quote unquote preferred lender was providing and he was like that's nothing special, I can do that for you. We were like great, we'll go through you. So again, work with somebody who's going to be honest, right? Like we never question whether David is going to be a benefit to us, right, Because we know he has said hey, go with that preferred lender, and when it's time to refinance, you come back to me, because he wanted us to have the greatest benefit and the best deal right, because they were, you know, putting taking off points and helping with closing costs and all sorts of things.
Speaker 1:And he'll, you know he'll try to match what's being offered. But in the event that he can't, he will say go with that offer and then, when it's time to refinance, you know, come back. So if you're not getting that kind of service, if you're not getting that kind of advice and consultative approach, go somewhere else, because you're probably missing out on a benefit.
Speaker 2:So kind of going into the last as far as understanding market conditions. I'm going to frame this in the reference of. You've already thought through all the other aspects. You are financially sound to purchase a home and you decided that, hey, you do want to go in, purchase a home, but maybe the one thing that's holding you up is the current market condition with interest rates.
Speaker 2:Now, the way that I've always heard it referred to me is that you marry the price of your home but you date the interest rate. So what that means is that don't necessarily be scared from purchasing a home. Now, obviously, if it's outside of your budget, that's a completely different story. But if you're scared away from a home that you could afford due to waiting for interest rates, you probably should just go ahead and pull the trigger. Reason being is that when interest rates being high, once they actually drop, what do you think is going to happen? Once interest rates drops, the housing cost is going to increase and also the demand, so it's going to be much harder for you to even purchase a home.
Speaker 1:So then that's when the inventory gets low. Exactly, yeah, and then, you've got people purchasing way over asking price and putting down crazy due diligence money and it becomes super, super competitive again.
Speaker 2:Because right now it's really tough because a lot of people are not selling or buying homes because of interest rates. But once those interest rates drops the competition is going to stack back up. So it might be a benefit to you right now as far as purchasing the home with maybe a higher interest rate but quote unquote in this environment a lower cost for the house and then just waiting until interest rates dropped to refinance. So understanding how that stuff works and understanding that is also working with the proper professionals, because they're able to frame that for you in a way that you would understand.
Speaker 1:And then also looking at future scenarios. I know we did that with David. I pretty much was like I need all the calculations because you hope, hey, we're locking in at this astronomical rate, especially coming off of the rate that we came from. We were like, hey, let's do six payments and then we'll refinance. That was the idea.
Speaker 1:Obviously here we are a year and a half later and the rates are not dropping. But we do know that when the rates drop I'm just going to speak it into existence that we'll be able to refinance. Our mortgage will go down, and then we'll be even more happy that we purchased the home that we did, because it gives us what we needed. Unfortunately, the interest rate is not where we want it to be. But when those interest rates go down and our mortgage goes down, we will be even more grateful for the fact that we made this decision.
Speaker 1:So it's a time game in some aspects, but we did the calculations to see okay, if the mortgage rates go down to 5.1, 4.1, right, what does that look like and what can we expect? And so, running the numbers and understanding what could that potentially look like, that's something that you're going to want to do. But also going into it with, hey, what if they don't drop? Are we comfortable at this price? What if you know we stay here for the next five years and the interest rates do not move? How will we feel about that? Can we comfortably afford it? Is it worth it? Does it make sense?
Speaker 2:Yeah, the idea of this conversation is obviously to think through the thought process process leading up to purchasing a home, but it's also to dispel the idea that renting is throwing away money a safe and warm or cold place for your child and your children and your family and yourself and your dog and your goldfish.
Speaker 1:It people need to just stop saying that it's.
Speaker 2:It's ridiculous yeah, because the way that I always frame it is like your first. So your primary resident is a lifestyle choice. It's not necessarily an investment, like I said. It could be an investment, you know and I, but I wouldn't base it off of these past three, four years of housing prices, because this is unprecedented and it's probably not going to be the way that it continues, in regards to such a rapid growth over a short period of time.
Speaker 1:We, most of us, work remote. They were living their best lives literally just traveling. They were doing like Airbnbs and all different states and traveling, you know, month to month, and I mean I don't know that you can comfortably do that when you own a home.
Speaker 2:Normally with your first residence? No, because normally your finances are going to end up being a little bit more strapped Right. For most people.
Speaker 1:Right, but if you're renting, I mean, these people literally were like okay, we're just not going to live here anymore and we're going to be, you know, nomads, and they sold a whole bunch of stuff and I mean it just it looked like a very adventurous way to live at that time.
Speaker 2:I mean, it's really kind of filtering out the noise of the older generation.
Speaker 1:Sorry, boomers.
Speaker 2:And focusing on how do you want your life to look. You know, like I said, I think one of the things that happens way too often is that people first take their financial advice from their parents. Now, take that with a certain grain of salt. Your parents can be extremely successful and not be good at giving you advice in regards to finances for now.
Speaker 1:Right.
Speaker 2:Because the same environment that they lived through to make them successful is not the current environment that we're in now.
Speaker 1:Right, I mean I think about that all the time, right, Like thinking about my parents and their income growing up. You know, we had two cars. They owned a home, we went on vacations. I wouldn't say that we had lavish things, but even then we had things in excess. I got a car in high school. We always had whatever the latest item was, whether it was a Walkman or a Game Boy or you know, as the consoles kind of changed, I mean we never needed anything like we had. We had everything in excess. The fridge was always full, you know, and I don't know how we did it, Knowing what my parents made as a family of four, I mean it, just I'm like how, how did we survive? How did we go on vacation? How did we have a great childhood? You know, I mean it, just I'm like how, how did we survive? How did we go on vacation? How did we have a great childhood? You know?
Speaker 2:I mean, I'm in the same boat. You know, we grew up middle to upper middle class on my mom's single income and I always joke when people ask about it?
Speaker 1:Spending your summers in Europe? I said I spent my summers in Europe, had a pool in my backyard and I grew up on a cul-de-sac had a pool in our backyard and I grew up on a cul-de-sac. Yeah, how we know, with inflation and the cost of life and our incomes not keeping up with those costs.
Speaker 2:And that's the biggest thing. That's not realistic Incomes have not kept up, so this issue of quote unquote inflation wouldn't be as big of an issue if salaries were on par.
Speaker 1:My salary inflated the same way.
Speaker 2:Yeah, but it's not even close and it's not even a disputable. It's not disputable. You can literally look at the numbers as math showing that we are paying substantially more in comparison for things now than our parents did and making substantially less than our parents did at this stage.
Speaker 1:Yeah, our parents did, and making substantially less than our parents did at this stage, yeah, so again, take their input with a grain of salt.
Speaker 2:Usually what they're saying was accurate or is accurate for the time and it comes from a good place.
Speaker 1:Yes, but it is 2024. Times have changed, the market has changed, everything's so expensive, and so you really just need to reevaluate and ask yourself why do you want to own a home? Just need to reevaluate and ask yourself why do you want to own a home? And then think about all those phantom costs that go into ownership, because the mortgage, the taxes, the insurance, the HOAs, the lawn care, when something breaks, it falls to you. There's a lot of costs that comes with owning a home that you could potentially avoid by renting.
Speaker 2:I don't have anything else to add.
Speaker 1:All right. Well, hopefully this episode was informative. Share it with a friend that's thinking about owning or purchasing their first home, and we will talk to you soon. Don't forget. Benjamin Franklin said an investment in knowledge pays the best interest. You just got paid Until next time. Thanks for listening to today's episode. We are so glad to have you as part of our Sugar Daddy community. If you learned something today, please remember to subscribe, rate, review and share this episode with your friends, family and extended network. Don't forget to connect with us on social media. At the Sugar Daddy Podcast, you can also email us your questions you want us to answer for our Pass the Sugar segments at thesugardaddypodcast at gmailcom or leave us a voicemail through our Instagram.
Speaker 3:Our content is intended to be used, and must be used, for informational purposes only. It is very important to do your own analysis before making any investment based upon your own personal circumstances. Thank you.