Why do military people buy houses when they need to move so often?

[Delicateflower]

I didn't think this was an appropriate question in the other thread.

We're currently renting a house owned by a military couple who can't sell it. And I know it's not uncommon to do this, we've looked at several homes that are vacant because the military family has moved. But I don't really get why you would buy if you know you'll be moving in a couple of years? We're in a very military area and around here there are lots of very nice rental houses in good family friendly neighborhoods for reasonable prices. So why are people buying so often? Is it to do with VA loans?

[Jadzia]

Just a guess here, but I am thinking a lot of people (military or not) got caught up in the "I need to buy a house as an investment" frenzy that was part of the housing bubble. When house prices are jumping up so fast you think "I better buy one now while I can afford it and I'll make a killing when I go to sell it in a few years."

But then the housing market collapsed. That is why you see a lot of people now who are trapped owning houses that they only meant to live in for a short time.

[jimblejamble]

They probably want to return to the area once their military time is up anyway, and since prices are so low right now they want to take advantage of that.

[velochic]

In addition to agreeing to the above, I think there was also a mentality of "we might be moving out, but there have to people who are moving in". Couple that with shows about flipping houses in weeks, I think that this younger generation heard a lot of things much differently than I did 20 - 25 years ago as a young adult. No longer did you have to have 20% down and get a fixed rate loan, plan to stay in a home for 10 years, prove you could afford upkeep, and not count variable income. That's not unique to military families, either.

My sister's dh was an Army helicopter pilot. I can't remember his title, but he was some kind of officer. My sis said that there was a TON of peer pressure in their clique and they were always trying to keep up with the Captain Joneses. I remember when she told me that their car payments on an Audi that her dh had to have was almost 20% of his take-home. I about had a heart attack. This was 10 - 15 years ago and they had to have a bankruptcy soon after her dh left the army because of a house that would not sell and that stupid car. I don't know about enlisted people, and I don't know if it has changed in the last decade, but this is how it at least USED to be. Because the communities are so much more tight-knit, the peer pressure and wanting to fit in must be great.

[Maluhia]

subbing - as posted on the other thread, I have a lot to say about this and I'll be back in a few hours to elaborate.

[sweetjasmine]

I was a military brat; my dad was in the Air Force. No matter where we were stationed whether here in the states or overseas, we always lived on base. I know some bases are better than others but for the most part you have a decent, liveable place to call home on the base without having to worry about buying and selling a house off base.

My sister is married to an Air Force captain and a few years ago, after coming back from Japan, they bought a house when stationed in Texas, then couldn't sell it when they got transferred to Colorado. They bought ANOTHER house in Colorado and were using up their savings paying for both mortgages. My dad finally helped with the TX house, in the meantime eating up his savings also. Now they are stationed in Ohio (he being deployed to Afghanistan) and she is living in a huge off-base house with the kids and having to maintain it herself. My bil is an officer, they would be in very nice housing on the base, plus she would be closer to the other wives who are going thru the same thing. I don't understand their reasoning on this issue?

[annekevdbroek]

Probably for some of the same reasons that civilians buy homes.

We are military and here are some of our reasons:

1. We buy a house that we can afford and that has a mortgage payment/property tax, etc. similar to what rent would cost us.
2. We do not want to live in military housing on base. Many, many reasons for this.
3 We can afford to - we have a downpayment, can afford to 'hold' the house if we need to, and are willing to deal with renting if it comes to that.
4. It has provided a huge financial boost to use over the last 3 houses (we made a lot of money). We now own a house that is almost 5x the value of our first home.
5. We put enough money down (e.g. 40%) that if the market tanks we are at least not under water
6. Emotionally, since we move often, it is very nice to have a space we can make our own and a house that truly belongs to us. We can paint it the colors we want. We can work on landscaping and not feel that we are 'throwing' it away on a rental. The emotional side of home ownership has been important to us.
7. We can buy a nicer house than we can rent - e.g. better maintained, etc.
8. We have seen people leave the military and buy thier first home after retirement, with a downpayment no larger than most 'first time' home buyers. We do not want to take on our first mortgage at the age that most people are 'paying off' thier houses. Buying a house that you plan to come back to means you buy at todays market prices and your income should go up relative to your house payment over the length of the loan, making your house 'cheaper' relative to your budget.
9. This is our last stop with the military - Dh is getting out and I told him I will not move again.

Personaly, I would really hate to see this turn into bashing of military people for poor financial decisions. As with *any* large group there are examples of people who make poor financial decisions and those who do not. Certainly, the military has no monopoly on people who make rash financial decisions, as our current economic climate amply demonstrates.

[Delicateflower]

Anne, I'm not military bashing, but it is a subset of the population who are almost guaranteed a move in a short space of time, and just from the military families I've met the rate of home ownership seems pretty high, and I can't figure out why.

Can I ask more questions of some of the things you specifically brought up? I don't know anything about the military, and it's not something you can just ask someone in conversation.

Affordability also factors in closing costs to buy and agent's fees to sell, and if you're selling in two years the house will have to appreciate more than 5% a year for you to break even. But does this apply in VA loans?

Aren't there options besides buying vs base housing? Why can't you rent a house off base?

Emotionally, since we move often, it is very nice to have a space we can make our own and a house that truly belongs to us. We can paint it the colors we want. We can work on landscaping and not feel that we are 'throwing' it away on a rental. The emotional side of home ownership has been important to us.

I can definitely identify with that.

[umarider]

We are military. Sometimes we've owned, sometimes rented or lived on Base. It really depends on the area, the housing market and schools, etc. As it works out, we've usually alternated between owning/renting from one duty station to another.

We bought a townhouse in MD at the tail-end of a buyer's market and made a modest profit after living there for 3 years. It allowed us better schools than living on base, and a much better quality of home. Base housing is often old, and rarely maintained well. A friend who'd lived on base in MD called to complain that her house smelled of a gas leak and was told "Oh, all the houses smell like that!" and no one came to check it out!

As a pp said, being able to decorate, garden, etc. and not have to get permission is wonderful! When dd deploys I often occupy myself w/ late night decorating projects to keep my mind off him being in danger.

When we buy, we try to take precautions against being stuck w/ a house we can't afford. But everyone, civilian and military alike is equally likely to make bad house-buying decisions (buying too high, buying 2nd house w/out selling the first one, etc.).

When you are forced to move every 3 years, it is important to find something positive to emotionally "pull" you through the move. When done logically, buying a house can turn the negative of leaving behind friends & familiar, into a positive experience.

[annekevdbroek]

You can rent off base. We choose not too, mostly related to the emotional desire for a house. But also because for us the savings just were not there. Bazse housing is often *yuck* and I personally don't like the base culture (everyone works and lives together and there are all kinds of spats and feuds and people up in each other's business in the *worst* way.)

Our houses appreciated more than 5%. Our second house was a big fixer upper and we made slightly over 50% after costs (upgrades, closing costs, etc.) in three years when we sold. (Actually, we increased our cash out of the house by about 400% - 50% over our purchase price + expenses. Our expenses were about 50k and we walked with 200k.)

Not everyone moves every two years. We had one two year move, a three, and this would be another three if DH wasn't getting out. We might not have bought most recently if we knew he wasn't going to get out. We would be looking now though, for sure. Our house price hasn't been much effected by the decrease as the area we are in wasn't terribly hard it and had already done most of it's adjusting.

We have never used a VA loan as the rates are less favorable than conventional bank loans. They are helpful to first time homeowners who do only have a low downpayment. I think you can only use it once.

I agree that it is sometimes puzzling to see someone buy a house when they are likely to move soon. I've had friends buy houses a year before they move. Honestly, it didn't make a lot of sense to me either. For whatever reason, its what they decided to do. I don't know their finances, or the outcome when they later sold.

[annekevdbroek]

Originally Posted by umarider

When you are forced to move every 3 years, it is important to find something positive to emotionally "pull" you through the move. When done logically, buying a house can turn the negative of leaving behind friends & familiar, into a positive experience.

This is so true - you said it better than me.

[Shelsi]

Originally Posted by Delicateflower

Aren't there options besides buying vs base housing? Why can't you rent a house off base?

To be totally 100% honest? Because renting gets really old. I know, not the "right" answer but it's the truth. At least for us it is. Dh is out of the military now but he's a military contractor so we still live the life...he still deploys, we still move around (albeit we have much more choice in location), etc. We can also now stay in one location longer than many military members.

Anyways when dh and I first got married we lived in Tucson. We rented off base for awhile then moved on base when I separated from the Air Force and became a SAHM. We thought about buying a lot but it just seemed not to make sense. Well we ended up staying in that city for 6 years! And even after the crash those homes were still worth a lot more than when we first moved there. Then we moved to northern Virginia and we can't afford the houses here...they are all $400K+ and we don't like it here anyways.

Anyways we're just about to move again, to a small town in New Mexico. We know the contractors contract with the government is good for the next 4 yrs so we know we can be there at least that long. There's nothing to rent there...seriously, they have newspaper articles talking about how the military there are being forced to buy due to lack of rental housing. And we can build a house for cheap there, under $200K and it's still well within our means. Also it's been announced that the base is being expanded and the town is supposed to increase by about 20,000 in the next few years.

[Shelsi]

You can only have one VA loan at a time. So if you buy a house using a VA loan it needs to be sold before you could buy another house with a VA loan. Like pp said the rates aren't always as good but it's good if you don't have a down payment. Dh and I likely will be putting zero down on our new house but because we have a VA loan we won't need to pay PMI for it. In the end it's prob worth the .4 increase in interest, kwim?

[Maluhia]

I think for the same reason everyone else does.

The issue I have (brought up before) is when it does not go well and the complaints imply that it is the fault of anyone but the buyers. Because buying a home for a period of under 5 years has risks and that is something assumed by the buyer.

If a military couple goes into it trusting only the "keeping up with the Joneses" type of theory without their own research (which I've seen in both civillian and military families buying homes) then there is a problem. If they are willing to put down payments above 0, buy a home that has payments that they can afford with some wiggle room for the costs of home ownership then great.

However I don't want tax dollars to go a program to "bail out" those who "have" to move (ie. as if it were a surprise, we have to move but let's not pretend it's ever not a surprise) and have a loss in a down market. If so - why not bail out people who have to move because of the bad economy? Nope, not the governments responsibility to bail out those of us who may loose $ in the housing market no more than it is for those of us who lost $ in our retirement accts. last year.

I do see young military families being offered more $ than is reasonable for their income because military are seen as "good bets" in the mortgage industry, and that burden of a house greater than one can afford (esp. with people who did ARM loans in San Diego, Hawaii, other big COL Markets) can hurt a military person's ability to hold a security clearence which is a big big deal.

I think the culutre implies we "deserve" more than we sometimes earn - right out of college a lot of our JOs are buying homes while still in BIG college debt, but I also see it in the civillian world so it is not only a military problem. The problem arises when the professional effects of debt in a military career come to fruition.

[Emmeline II]

Originally Posted by annekevdbroek

We have never used a VA loan as the rates are less favorable than conventional bank loans. They are helpful to first time homeowners who do only have a low downpayment. I think you can only use it once.

As long as the new buyer gets their own loan and does not assume the VA loan, the member can get their entitlement back, though you get the most benefit the first time you use the entitlement.

We just used mine for the second time and the fees were higher. We've happened to buy three new construction houses in a row and the VA always had the best rate. It may not be true for existing houses though.

I must say that a REALLY aggravating thing about renting as a military member is that you can rarely "get ahead", meaning that every time the military raises the BAH, rents also increase. When you own a home your mortgage is fixed so you can live below your means and not be stretched to the max.

There are several drawbacks to living on base housing:

You are close to work so you are often called in first, particularly if the weather is bad.

People are "all up in your business" as a pp said. If you tick off your neighbor you could be hearing from your boss. I've also heard of known midwives being banned from a base as well as planned homebirths. When I lived in the dorms someone wanted to "home" all squadrons together; super. I had a young airman that could not manage to keep his stereo down (it's not as if he didn't know we worked shift) so it was either be satisfied with asking EVERYTIME for him to keep his stereo down or tell the Shirt and have it taken away. Another issue for me was when an Airman from another office in my squadron got rough with another Airman from my office; I had to fill out a police report then see this guy everyday at work and at "home." It sucks living with your co-workers.

If you are on base and your base has a school and it is difficult to school off base, you need to fight with the military instead of the relative black and white of civilian schools (re: vaccination)

The military is the meanest HOA ever :.

Base housing is often old, small, and/or really awkward walk-up apartments.

[Hey Mama!]

We were a military family for 9 years. It always seemed a little odd to me to buy a house when you are military. We moved at just under every 3 years. Yes, base housing often sucked but I thought it would be burdensome to deal with buying and selling a house every 3 years. But, that 's just one ex-military wife's opinion.

[Emmeline II]

Originally Posted by Shelsi

You can only have one VA loan at a time. So if you buy a house using a VA loan it needs to be sold before you could buy another house with a VA loan.

It's more accurate to say you can only use a members benefits for one house at a time. If you have two members with benefits you can have two VA loans.

[Ola_]

In recent years you could often make money when selling after just a few years. Nowadays it won't be the case and people will really be hurting.

[Shelsi]

Originally Posted by Emmeline II

The military is the meanest HOA ever :.

Base housing is often old, small, and/or really awkward walk-up apartments.

yes it is! We lived on base for 4 years and I bet I got well over 100 notices on my door about why my house wasn't up to standard. If I really hadn't been trying it wouldn't be so bad but I was out there in 110 degree heat with my 2 yr old on my back mowing, weeding, and edging the friggin lawn while dh was deployed so I would get really PO'd everytime I get those notices!

I have to say though our house was pretty nice. Of course I gave birth in that house so it has sentimental value as well. But while it wasn't modern, it was solid and not falling apart. We were Air Force though and I've always heard they have better housing.

[1stimestar]

Up here in Fairbanks, Alaska, we are a military community. Renting costs just about twice as much as a mortgage payment so I could see why they would want to buy. Also, a couple of years ago, they ran out of base housing. They have been furiously building new houses since then and the new ones I have been in are pretty nice, but they are still base housing...pretty neutral, not much character.