Buying a house????

[Toby'sFriend]

So a smallish three bedroom or three beds and den home (1. b/c higher resale with 3 bedrooms 2. DH needs an office 3. Hopefully a new baby 4. We are from MA, our family and friends some to visit) Something a bit newer, again see the utilites reference above. Would prefer a single family house, mostly for resale, but not opposed to a condo. I would say about 1500 square feet. Two baths.... I don't think that is a dream house, I think of that as a starter home.

well, I think that is the point people are trying to make. Your thinking is kind of indicitive of a shift in the mindset of first time home buyers. When my husband and I and most of the people our age (38) bought our first homes, we certainly would have liked to buy a 3 bedroom/2 bath home with a Den also.....but it just wasn't possible. Those certainly weren't described as Starter homes -- those were the homes our parents owned.

If it helps any, most of the trend projection literature I read on the Chicago area is pointing toward growth in the Indiana border (Dyer, Crown Point), and also Will County in Illinois, especially along the I-57 corridor out around Frankfort. There is alot going on with the 3rd airport and Tollways right now that point toward those areas growing over the next decade or so. The Naperville area has also been booming ever since that Money Magazine article last year. Well, it was booming before but it is extra booming now. The school districts are good, but they are also facing huge overcrowding issues - I'd keep an eye on that. I'm not certain how important it is for you to stay right in that area if and when you become a SAHM.

 

[buddy&wooz]

Everything cycles. When I got married in 1986 we were young and housing was expensive. We lived in rental apartments for 10 years, our first two kids were born during that time, I was able to stay home with them- I really never felt like I was missing anything by not having a house (and yes, I grew up in a large colonial, as did dh- we were definitely not living the life we'd had as kids!)

Eventually the housing costs got more reasonable, dh was making more money, and we were able to buy a home. Not a huge one- a 3br 2bath ranch on a busy road, less than 1800 sq ft. We're still in it, and now able to use our equity to add on to it and make it more of our "dream home". 20 years after we got married.

I agree that expectations are different now. But things worked out fine for us.

 

[The Mystery Machine]

. So a smallish three bedroom or three beds and den home (1. b/c higher resale with 3 bedrooms 2. DH needs an office 3. Hopefully a new baby 4. We are from MA, our family and friends some to visit) Something a bit newer, again see the utilites reference above. Would prefer a single family house, mostly for resale, but not opposed to a condo. I would say about 1500 square feet. Two baths.... I don't think that is a dream house, I think of that as a starter home.

I don't see that as a "starter" home either.

A starter home is 2 bedrooms/1 bath, kitchen & living room.

 

[Christine]

I don't see that as a "starter" home either.

A starter home is 2 bedrooms/1 bath, kitchen & living room.

Or a condo or townhome.

 

[barkley]

theres realy no such thing as starter homes around us anymore (northern california) there are older homes and newer homes. my 2500 sq ft 4 br/2 bath that is only 7 years old and is in top shape will sell for around $600,000-my mil's 1000 sq ft 3 br/2 bath which is over 40 years old and would need major repairs would sell for around $500,000. i can see where it would be more appealing to buy the bigger house that is in better condition when it could only end up being $50,000 difference in the price.

the townhouses and condos are running around $450,000 for the smallest units. 2 br/1 bath homes are unheard of (with the exception of mobile homes which sell for over $200,000 and have no real opportunity for gaining equity).

i can so sympthize with how hard it must be to come up with a down payment-they just printed an article in our local paper with the average rental prices: $1300 for a 2 br/1ba less than 700 sq ft. apartment (not including utlitites except garbage/water). i can't imagine being able to save much with that type of rent to deal with. wages just have'nt kept up with housing cost increases.

 

[Disneyrsh]

We can't afford a house right now, either. DH is still in school and, while he is working part-time at a fairly decent hourly wage, I'm still the major bread winner and I just have a modest/average salary.

Even when DH does get a full time, salaried, job, I'm afraid we're still going to have a hard time. We could move way out in the suburbs where stuff is more affordable (my best friend bought a beautiful new townhome in McDonough, Ga for $97,000 2 years ago!) but I work in the city so I can't go too far out or the commute will be hell. It's kind of disheartening because I'd really like to start trying for kids within the next year and I don't want to be in an apartment anymore.

You know that they're trying to get the MARTA out to McDonough? My parents want to retire there....My husband takes the MARTA every morning in from North Springs, he downloads tv shows onto his Sony PSP and watches Sports Reporters on the way in.

 

[malibuconlee]

OK...so what was your first real rent you had to pay??? Hmmmm?

Ours was $240.00 (in 1986). That included ALL utilites (everything!) and it was furnished (bed & 1 dresser). You got burned in the shower from the 14 people that lived about us, when they flushed the toliet.
We had a tiny stove & oven, a small old refridge. You could go to the bathroom, take a shower and brush your teeth at the same time our bathroom was so small.


We love to tell our dd's our stories, we also have pictures! We had raccoons living in the old chimney walls!

We tell them that we hope they have some good stories to tell when then venture out on their own.

Ours was in 1996 in a town of about 4,000 people. We had an apartment that was just off of the square in a downtown building. The storefront downstairs was empty. We paid either $325 or $350 a month. No utilities included except water. It was a nice apartment with HUGE rooms (2 BR), but no off street parking. And the city cleaned the streets "every" (read whenever they felt like it) Thursday and if your car was there it got towed. Happend to at least one vehicle twice and both vehicles once. That sucked at 3:30 AM when we got up to get ready for work. And hauling groceries and laundry up all those stairs was a royal pain.

The worst place was 2 years later in Salt Lake City. Bad neighborhood, horrible apartment. The roof had caved in before we moved there, but we didn't know that. They didn't replace the carpet. We moved in January, and it wasn't as bad then, but when it got hot out that summer the carpet REEKED!!

 

[CheshireVal]

You know that they're trying to get the MARTA out to McDonough? My parents want to retire there....My husband takes the MARTA every morning in from North Springs, he downloads tv shows onto his Sony PSP and watches Sports Reporters on the way in.

Yeah, I've heard they want to run a line down to Locust Grove.... but I really don't think it will ever happen. Most people who live there really don't want it!

 

[CheshireVal]

well, I think that is the point people are trying to make. Your thinking is kind of indicitive of a shift in the mindset of first time home buyers. When my husband and I and most of the people our age (38) bought our first homes, we certainly would have liked to buy a 3 bedroom/2 bath home with a Den also.....but it just wasn't possible. Those certainly weren't described as Starter homes -- those were the homes our parents owned.

I don't think a 3 bedroom home is really asking all that much, though. In my situation... I'm 31. I feel like the clock is kind of ticking when it comes to having kids. Why would I want to go to all the trouble to buy a 2 bedroom house when I know that it's *hopefully* going to be too small to meet the needs of our family? Even if I can cram two kids into one bedroom, I'd still really like to have a spare bedroom for my mom to stay in when she comes to visit the future grandkids.

I don't expect a mansion, but a 3 bedroom would be perfect right now for what I'm planning, and I don't want to go to the trouble to buy a house only to have to move on to something bigger 2 years from now.... such a hassle! I'd rather find a place I can stay in for at least 5 years.

 

[Lyn5]

The housing prices here are insane too. I can see both sides. I feel so bad for my friends/family starting out and can't afford a place. I also see that the definition of a "started home" is much more different that a generation ago. Here most "starter homes" in new subdivision include 3 or 4 bedrooms (one with a master-bath) and some have central air and an enclosed two car garage. Wouldn't help those that would be happy with a 2 bed/1 bath house....which just aren't offered any more. Townhouses/condos are also very expensive and are 2 or 3 bedrooms. I am so glad DH and I took a chance with our home in our early 20s when the market/economy here was horrible.

 

[Crankyshank]

Wanting a 3 bedroom isn't asking for much if you're willing to wait until your finances are in the place where you can afford one. Personally I'd rather put money into a house or condo I own, sell for a profit, and invest in something bigger even if it's a couple of years away than throw it away on rent. But that's just me.

But one can't claim to not afford a house on their salary because anything under $300 is a shack or overcrowded subdivision that doesn't have its own backyard (which actually amuses the hell out of me because the opposite is true here- the mcmansion being built up for 3/4 of a million in my area are the ones in subdivisions that share backyards).
It's just not exactly true - there are homes out there that are quite nice for lower prices. They're just smaller and usually require a bit longer of a drive to work. The 3 and 4 bedrooms aren't necessarily more unobtainable than they were generations before. It's just that it used to be people bought a small starter home, sold it once their family outgrew it (like what DH and I plan on doing with ours), and put the money they got from selling the house into a larger house.

It just seems like a lot of people want to skip that first step and if you're without the proceeds from the sale of a smaller house or condo then yeah I'm sure those 3 bedrooms and higher probably are pretty much out of a first time homeowners price range in many areas. I know it would be for us if we went for the bigger house initially.
So basically my point is that it's not that people can't afford homes in most cases, it's that they want to skip over the traditional step 1. And honestly I don't blame them. if you can afford it go for it. I know I would if I could at the time. Just don't complain you can't afford any house when the truth is you just don't want to settle for a starter home.

 

[DMickey28]

Val, I think we are on the same page! I am a few years younger but still in the same place.

Maybe i grew up with the entirely wrong idea according to this board, but it's what I know and what I desire for my future. There is nothing wrong with it if we can do it and make it work. The truth of it is, DH has been working for 10 years and has made a career and is doing great. I have been out of school for four years and have a good paying job with a career path if I choose that. It's not like we are just out of school and struggling to start. We are just cleaning up some credit mistakes and waiting to know when DH's transfers will slow down enough for us to buy. In the mean time looking around and seeing what homes are costing is scarey. It's not that we couldn't afford the mortage/taxes/insurance on a $250k house, it's the down payments and probably the natural fear of such a large step.

My parents built their first home in 1978. I was born in an apartment. They built a three bedroom/two bath house with a finished basement with an office. I guess that is were my idea of a starter home comes from. They were also not incrediably well off or anything. I am not going to go from a good two bedroom renter home into a smaller house with a baby. DH works out of the house when he isn't on the road so he needs a home office. That makes up for the NEED for a three bedroom house, the three bedrooms with a den is a dream b/c our family is always coming out here, and will only be doing more with a baby, and would be awesome, but probably not realistic and that's ok.

If the a older two bedroom house costs $150k-$200K and then a new house in a new subdivision in a town west of the city that is growing is 150k-200K, how is can the newer home not be consider a starter home? Why is it skipping the first step to want the the new house?

Maybe my standards are too high and I reach to far, but having the trait across your life can only get you good places, as long as you are wise about it. I am not going to aim low....

 

[Crankyshank]

If the same older two bedroom house costs $150k-$200K and then a new house in a new subdivision in a town west of the city that is growing is 150k-200K, how is can the newer home not be consider a starter home?

You can't compare it that way. How much are 3 and 4 bedroom homes with significantly larger sq footage in the same town the 2 BR house is? Are they the same price as the newer homes in the newer community or are they more money? The whole concept of the starter home is to "start" small, build equity, sell for a profit when your family grows, and put the proceeds into a larger house.

Of course a newly developed area is going to be cheaper - it's not as developed and therefore there is less of a property demand.

Maybe my standards are too high and I reach to far, but having the trait across your life can only get you good places, as long as you are wise about it. I am not going to aim low....

Good for you, but realize you can live in a small house and have high standards and get pretty far in life too. If I sold my house right now, based on market value, I'd have close to $100,000 to put towards that bigger house. Sure beats spending that money on rent the past 3 yrs and trying to save for a downpayment on the same house I'd be putting my house sale proceeds towards . I'd say that was aiming pretty well and getting good places

 

[Lyn5]

When my sister was first married and she had twins, she and her DH lived in a one-bedroom apartment (if you could call it that) which they rented from her DHes family. My mother would fly out to help her and slept on the couch. They lived like that for over a year until they could afford and found a house that was in their means (and included a longer commute). Living the way they did helped them save the money they needed for a the down payment.

 

[DMickey28]

Of course a newly developed area is going to be cheaper - it's not as developed and therefore there is less of a property demand.

If that town growing and prices increase b/c people are moving out there then you can still build that equity.

Maybe the town does not matter as much as I think it does. Someone pointed out, we don't have kids so we don't need the best school district at this time. So why not buy in the less desireable town and move up with the equity. How is that skipping step 1?

 

[Crankyshank]

If that town growing and prices increase b/c people are moving out there then you can still build that equity.

Maybe the town does not matter as much as I think it does. Someone pointed out, we don't have kids so we don't need the best school district at this time. So why not buy in the less desireable town and move up with the equity. How is that skipping step 1?

Whoa there - I didn't say not to buy the bigger house in the newer district. I said you can't compare an established town and an up and coming town regarding starter homes. Buying a home you can afford now in an up and coming area and selling it in a few years at a profit makes fiscal sense - it's why people on the RI/MA border that bought a house to flip are making a killing in the market for the past few years.

Skipping step 1 is going straight for the bigger house with the bigger price tag because you don't want to waste your time building equity in a smaller house for a couple of years.

 

[Toby'sFriend]

Maybe my standards are too high and I reach to far, but having the trait across your life can only get you good places, as long as you are wise about it. I am not going to aim low....
__________________

ok, I think you are misunderstanding what people are saying.

You started a thread asking us how people manage to buy homes. Then you told us that the only homes near you under $300k are shacks - tract homes - and places you don't want to live. That certainly is not my impression of housing in suburban Chicago, but if that is how you view it -- ok.

How I did it, and how most people I know did it, is that we made some compromises in our first purchase to get ourselves into a house.
At that point -- we were able to take advantage of Real Estate appreciation and being able to deduct our interest payments and real estate taxes off our Federal Tax bills, saving thousands of dollars a year. Eventually, we had saved enough money that we were able to buy a house that we REALLY liked.

If you consider that not aiming high and you don't want to compromise by moving down to a smaller house or another area for awhile, that is fine. You can either relocate to another part of the country or just try to save money in a savings account.

 

[CheshireVal]

I also think the difference between "starter homes" of older generations and "starter homes" of now are completely different based on current trends. People are getting married later in life now, on average. What would have been a terrific starter home for someone in 1975 who was newly married at 20 is far different from what is practical for someone, like myself, who is newly married at 31 (in 2006!).

I'm not sure if that made as much sense in "print" as it does in my head, but the point I'm trying to make is that, at my age, I don't have time to waste on a 1 or 2 bedroom starter home. I'm worried that if I wait until I'm in my mid 30s to try to have kids, I won't be able to have them at all.

And, for the record, I have been living in a 1 bedroom apartment all these years. After we married (not even a year ago), DH and I moved into a 2 bedroom apartment (mainly for the added storage space for all our junk) until he graduates school and gets a full time job. I just don't see us being able to raise a child where we are right now, though. It's not really what I had envisioned for myself all these years.

 

[The Mystery Machine]

If that town growing and prices increase b/c people are moving out there then you can still build that equity.

Maybe the town does not matter as much as I think it does. Someone pointed out, we don't have kids so we don't need the best school district at this time. So why not buy in the less desireable town and move up with the equity. How is that skipping step 1?

If your area is less desirable your equity may not move up as fast as if you had bought in an area that was desirable.

Plain and simple it is a game...Can you choose well, have luck or are you following the the trends? It is not easy and makes you sweat, for sure!
If you have kids in school you know the areas which are "hot" and which are not. Since you do not have children yet you are missing that info for home buying. And believe me...it is talked about.

Example...I am in Texas. We bought in Flower Mound. Flower Mound is growing and doing well.
Alot of people that have bought in Frisco, McKinney, & Richardson are having a heck of a time getting ANY equity out of their home.
Building is huge and exisiting home cannot compete with building a new one.
So....my point is....I am gaining better equity in my home purchase than someone in Frisco.
Also I bought in the last phase, a spec, got an OK deal. However once the subdivision is finished the price goes up.

There are alot of factors and luck. Just do your homework!!!

 

[Crankyshank]

I also think the difference between "starter homes" of older generations and "starter homes" of now are completely different based on current trends. People are getting married later in life now, on average. What would have been a terrific starter home for someone in 1975 who was newly married at 20 is far different from what is practical for someone, like myself, who is newly married at 31 (in 2006!).

I'm not sure if that made as much sense in "print" as it does in my head, but the point I'm trying to make is that, at my age, I don't have time to waste on a 1 or 2 bedroom starter home. I'm worried that if I wait until I'm in my mid 30s to try to have kids, I won't be able to have them at all.
.

I'm the same age as you. I also am planning on having children within a few years. I think the whole point of the starter home is being misunderstood.

Let me put it to you this way - instead of spending over $1000 a month on rent for the past 3 years while I struggle to save for a down payment on a 2500 sq ft or larger home to accomodate a growing family, I purchased a 1200 sq ft 2br/1 bath house with potential to build on to. I do not plan on raising a family in this house.

My Mortgage payment is comparable to what I would be paying in rent. The benefit is that I've gained equity so if I sold my house right now I would get about $100,000 profit. That's a pretty hefty sum to put towards the house I want to raise a family in. Not bad for 3 yrs in a small house the size of a very large apartment. It'll be even better when I finish the minor upgrades we are doing so that by the time we go to sell our house when our future child is a toddler I'll be reaping an even bigger profit. Plus, like TF mentioned, I'm also getting a bigger tax break every year as a homeowner than you are getting as non property owning DINK. All of the interest I pay towards my mortgage every year (and the first few years you own a house are mostly interest) are all tax deductible.

I don't understand how spending money on rent and saving up for a down payment on a larger house is better than compromising for a couple of years when you don't have children in order to reap some monetary reward to put towards your dream house.