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the myth of the starter home

 
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sans boston
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PostPosted: Sun Oct 08, 2006 1:18 pm GMT    Post subject: the myth of the starter home Reply with quote

If you were thinking about buying a house or a condo, you know of the concept of "starter-home." My family, who are the old fashioned type, kept saying, "buy a starter home, build some equity, and when you're ready to start a family, move out and buy something bigger."

Imagine this idea in a bubble market. You buy a two room condo as a "starter home." As you settle in, you're wife says, "Honey, I have some great news: I'm pregnant!" Congradulations! A year later, one of your spare rooms becomes a nursery and you're renting a storage room at United Store-All. You're walking over toys, and you're looking at moving up to the next size.

Unfortunately, the amount of equity you built did not keep pace with the real estate market declines. You're the optimistic type and you think, this is just a momentary drop. You keep hearing the news, "a soft landing."

The "soft-landing" doesn't mean that your home price doesn't crash, it refers to the economy as a whole. Location determines what happens to your house, and surely, there are areas in Boston where real estate prices may even go up (the real estate agents will certainly point it out). If you see that "Wellseley" is still going up, even though "Cambridge" is crashing, you'll think, "Hey! Sooner or later, Cambridge will swing."

You review the options: A.) rent the condo, B.) sell at a loss, C.) hang on and wait for the swing.

The real-estate agents need to still make a living, so their advice will be, "sell the condo now (we can help you with that) and roll the debt (loss) over to the new mortgage, and buy something bigger (we can help you with that too)."

What do you think then: Condo's will Crash, but Houses stay Flat?
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AgentGrn



Joined: 28 Sep 2006
Posts: 82

PostPosted: Tue Oct 10, 2006 9:14 pm GMT    Post subject: Reply with quote

I can only speak for myself, but in my point of view, a condo is simply an apartment with a real bitch of a lease (mortgage) attached.

There are some benefits to this lifestyle, particularly in the city. Maintenance is covered, sidewalks are shoveled, the locations can be convenient for work and leisure. I could go on. I find townhomes similar ... except those have their own outside entrances.

Truly, I want a single-family detached that's not a McMansion. A true "starter home" per se. If my needs change and I can't move, then I can add on. Can't do that in a condo. Unfortunately, the art of building a smaller, affordable home has been lost. The appreciation mania and "gotta have it now" attitude has warped the function of demand. Now, lots of these huge spaces (which are also expensive to heat/cool) are sitting idle.

As an aside, I find the scenario humorous since my son was born 3 weeks ago ... and my wife and I rent a 2BR apartment which is about the size of some of these condos for sale (albeit at outrageous prices). We're also tenants-at-will, which is great flexibility for when we find a nice place at a nice price.

And yes ... we're willing to wait awhile instead of getting soaked ... or suckered.
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Dorchester grandma
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PostPosted: Fri Oct 13, 2006 3:22 pm GMT    Post subject: starter home Reply with quote

My parents and grandparents bought modest homes 6 room homes in the forties and fifties not as "starter homes" but simply as a place in which to live indefinitely. My parents added a room on the back to free up space and provide more storage. They finished the basement. We saw the maple tree tree that they planted in the back yard grow into as full sized tree over the many years that we lived there.

I have been looking for a condo for over a year now unable to afford a house. I would love to have a floor in a triple decker with porches and a little yard in the back like the one that I am currentlly rentiing. I would like enough room for my grandchildren to run around in. I would not consider this a "starter home" but simply a place that I can call home right now and maybe be of some use to my kids later on to live in or sell.

Is the ideas of buying a modest home in which to raise our kids a thing of the past? Or is it just a means to acquiring something bigger and better down the road. How about just having what we need to be safe and comfortable Confused
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sans boston
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PostPosted: Tue Nov 07, 2006 1:48 am GMT    Post subject: stuck in a starter home Reply with quote

Do you think most people are willing to "tough-it-out" in a starter home - or a starter condo, while their family grows? Is there an intangible benefit of living in the city, maybe near your job, or the rich culture of the City, that makes sacrificing space and paying a premium?

Is Boston heading to become a city like London, Tokyo or New York? People are willing to pay more of their income to live in a stimulating environment. Would Boston fit the same mold?
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AgentGrn



Joined: 28 Sep 2006
Posts: 82

PostPosted: Tue Dec 19, 2006 4:37 pm GMT    Post subject: Reply with quote

I think a stimulating environment is fine, if that's what people want.

I would just prefer to find something that's closer than an hour to work at a reasonable price. However, I'm not willing to sacrifice a majority of my income to do so. The use of equity to maintain a lifestyle seems to be all too common now and I'd much rather have something at the end of every month to put into savings, stash into my 401k, and the 509 my wife and I are opening for my son next year ... and still have a few extra dollars for a hobby.

An important value to me that makes the market tough to bear is that my wife and I are looking at places that would still be affordable if I either of us were to get laid off for some time without having to worry about being foreclosed on. In the meantime, we'll rent and save for the next year or two.

So many people have bought into this home ownership myth and affordability is still very much a problem. The endgame of the correction is going to be somewhat amusing, if not scary to watch.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Thu Dec 21, 2006 8:47 pm GMT    Post subject: median affordability Reply with quote

If the median family salary is 100k and you shouldn't spend more than 3.5 times your salary, the median price should be $350k.

The post WWII baby boom in Boston which Dorchester Grandma refers to is the era where GI's got starter homes. They are very similar because many of the GI's shared the same economic status. The GI's wife typically didn't go to work either.

Think about today. Not everyone is required to serve in the Military. A twenty-something coming out the Military doesn't have a fair chance to buy one of these starter homes. The guy with the Masters Degree and his wife with hers are both going to work to afford this 60 year old "starter home".

It seems that there is no room at the Inn in Boston for working families. These people will need to move out beyond the suburbs.
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AgentGrn



Joined: 28 Sep 2006
Posts: 82

PostPosted: Thu Dec 28, 2006 5:12 am GMT    Post subject: Reply with quote

And certainly evident in the population shift over the last couple of years, they will continue to keep moving out of state.

That's an option my wife and I are very seriously considering.
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