Down payment on a dream

Today's young adults have come of age during a dark time for the housing market.

Falling home values, a record number of foreclosures and stricter credit requirements to qualify for a mortgage paint a bleak picture of home ownership. The number of Minnesota households that own their home has dropped to 70 percent, from 79 percent in 2005, according to U.S. Census data..

But that's not stopping many under-30 homebuyers from committing to a 30-year mortgage rather than to a monthly rent payment.

Adam and Elspeth Weis calculated that they had spent $35,000 on rent over the three years they lived in an apartment. "That's enough for a down payment on a house," said Elspeth, a client associate for Merrill Lynch.

They saved for a down payment for 15 months, and last week closed on a 1940 Cape Cod in St. Paul's Highland Park neighborhood. "It was fun to mow the lawn and sit down on the deck and have a cold beer at my own house," said Adam. "It was a nice feeling."

Buoyed by record low interest rates and affordable home prices, many young buyers have excitedly snapped up starter homes with big yards, garages and tons of storage space for sometimes nearly the same monthly mortgage payment as their apartment rent.

In recent years, some economists have concluded that it's smarter to rent than buy, because of the financial commitment of a house, said John Archer, cultural studies chairman at the University of Minnesota and author of "Architecture and Suburbia." "But the combination of low [interest] rates and low prices gets young people to reconsider that dream of owning their own home."

Last year, the majority of Edina Realty agent Judd Sampson's clients were young singles and couples purchasing their first homes, and he expects that number to climb this year. "They have more confidence in the market because of pricing, and they know their monthly payment will hold steady," he said.

"I've seen a re-emergence of young people testing the market," agreed Jean Marks, the Coldwell Banker Burnet agent who sold the Weises their home. "Before they walk in the door, they've already seen photos and calculated their payment."

Agents say that buyers from this generation are much more cautious about financing, the condition of the house and, especially, where it's located. "They save a little more for down payments -- and they love their research," said Piper.

Financially savvy young buyers who make offers only on homes they can afford aren't going to lose sleep over the future of the teeter-totter housing market.

"I know how to live within my means, and I'm not a crazy person," said Kayleigh Halter, 23, who just bought her first home in Minneapolis. "So I think I'll be just fine."

Owner: Kayleigh Halter, 23.

House: 1942 Minneapolis bungalow near Lake Nokomis she purchased for $169,900.

Why buy? Her monthly rent felt like a waste of money. "Buying was the perfect solution," said Halter, a sales product planner for a retailer. "Plus now I have a basement to store my stuff."

Why this house? It boasts period charm, including crown molding and built-in bookshelves, and the housing inspector told her it "was in great condition."

Big decision: "Changes are exciting -- going from a rental to my own house -- but it was scary spending all this money," she said.

Safety net: Her parents encouraged her to buy a home that fit her budget, but in case of an emergency or if she lost her job, "they're here to help me financially," she said.

First night in her house: "It felt like camping," she said. "I started thinking about the future and how I'll decorate."

Owner: Mitch Olsen, 24.

House: 1976 split-entry in Champlin he bought for $122,000. It was a bank-owned foreclosed home with water problems in the basement.

Why buy? "I've rented an apartment and my house payment is a lot less," said Olsen. "A couple of my friends bought homes, and I saw it was worth it."

Stress-inducing: "It was nerve-racking signing all the documents at closing," he said. "I got a 30-year mortgage. It's a big deal."

What, me worry? "If I lose my job, I feel like I could turn around and rent it for more than my mortgage payment," said Olsen, who works for a medical device company.

Best part of home ownership: Olsen's puppy loves romping in the yard, and Olsen can work on his cars in the garage. "It feels good when I write out that $1,000 check each month and I know it's not going to a slumlord," he said. "It's going to my own home."

Owners: Carah Pruitt, 26 and Curt Blythe, 29.

House: 1947 stucco home on a corner lot in St. Louis Park. They paid under $300,000 and will be closing in about a week.

Why this house? A finished attic master bedroom and basement, three-season porch and big back-yard paver patio. "I couldn't stop thinking about the house after we saw it," said Pruitt, an IT auditor for an accounting firm.

Savvy savers: They saved for four years so they could put down 20 percent.

Foreclosure crisis: "We looked at a lot of foreclosed homes that had been trashed inside," said Pruitt. "You could tell the owners were frustrated."

Feel secure: "Traditionally, it's a safer investment than stocks," said Blythe, who works in IT security for a medical device company. "We plan to stay for awhile."

Most stressful: Purchase agreement negotiations and the fear of being outbid. "Now we hope the closing is on time," said Blythe.

Owners: Elspeth, 26, and Adam Weis, 25.

House: 1940 Cape Cod in St. Paul.

Why buy? They both grew up in St. Paul and felt that Highland Park was a desirable, stable neighborhood. "A home isn't a sure investment today," said Elspeth. "But we'll still build equity, especially in Highland Park."

Why this house? Move-in condition with a fireplace and a huge deck off the back. There's plenty of yard space if they want to build an addition. Plus it had a new roof and windows and remodeled kitchen.

Foreclosure effect: When the Weises toured several foreclosed homes that were good buys but needed costly repairs, they got a reality check. "We felt bad when we saw these homes," said Elspeth. "We made the decision we wanted to be comfortable with a starter-home mortgage payment rather than going to the top of our budget and have to dump money into it."

High anxiety: "When they show you how much you'll spend for a 30-year mortgage, it made my heart stop," said Adam, a brewer for Lift Bridge Brewing.