RE Prices in my town keep going up, but that is because we are VERY close to the city (less gas $$), have a town that is hot and revitalizing, and have very few homes up for sale. Plus, Philadelphia suburbs are half to two-thirds the cost of equivalent suburbs for NYC and DC.
I'm 26, and have an advanced engineering degree. I make a good deal of money. NJ isnt cheap. What did it take? Saving. I knew from right out of college that renting is inferior to owning a home, because though I pay thousands of dollars in interest today, Ill have something that has some value, ain a town where I want to live, with my space, my privacy, my choices, and after the mortgage is paid off, Im not owing anything but my taxes... I decided that owning was right for me, and so I was disciplined to save and save. Did I give up some times eating out? going out drinking with friends? a road trip? the latest name brand stuff? yes. But in the end, at 25, I bought a home that will do well by me for a LONG time.
Within reason, discipline is what is necessary. I grew up in north NJ, and in the towns around there, $450-500k will buy you a lousy shoebox fixer upper. That said, I have friends who were careful and have bought homes about the same time. Im sure they got money from family to help out, but if that is the reality of things, then it is what it is. I'd say that the following help the most:
1) lots of savings
2) wage-earning significant other
3) friends willing to be roomates (though this can be troublesome, and likely wont equate into your mortgage qualification)
4) money as a permanent gift from family
At that point, realities are what they are. You can only afford as much as your job pays and you can give as a downpayment, after your debts and taxes are considered. You can play games, like an 80% mortgage, 20% HE loan to finance the whoile property, etc., but youre still limited by what you can reasonably pay.
Given all the doom and gloom, Id just say to make sure that you maximize quality of location over vanity, desires, etc. Given how overstretched the general population is, how lousy their decisions are, how much money they waste, etc., when things come crashing, they will crash first with the mcmansions with too much space, too high a heating/cooling bill, and too far a commute. While nice for showing off and playing the vanity game, being expensive to keep up, keep hot/cold, and being far from the centers of prosperity will catch up with their prices and demand. So long as we don't let our cities and towns get too overrun with crime and corruption, things will be OK for places where people want to be - but that is a location-specific judgement.
JMH
