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Mon May 2, 2022, 08:01 PM

For first-time homebuyers, are starter homes becoming extinct?

There were smiles aplenty at the ribbon-cutting event at the Village Gardens in Seattle.

The occasion? To celebrate the completion of 16 new modern-looking starter townhomes not too far from Jimi Hendrix Park in the city's Central District neighborhood.

About eight homes will be available to households who make less than 80% of the area’s median income and two will be for those considered homeless or who had financial problems keeping a home.

"We got super frustrated by those who didn't believe us, that there is a lack of homes for middle-median income folks," said Kathleen Hosfeld, executive director of Homestead Community Land Trust, the organization that worked with the city to build the affordable housing. "This is not just a Seattle problem, this is happening nationwide."

https://finance.yahoo.com/news/first-time-homebuyers-starter-homes-090356804.html

I haven't much of anything being built that could be called a "starter home" in my area over the last thirty years.

Condos may initially appear to cost less but when one factors in HOA fees in addition to a mortgage costs go up appreciably.

This is also exacerbated by so called REITs (Real Estate Investment Trusts) that are buying up many existing homes and turning them into rentals.

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Reply For first-time homebuyers, are starter homes becoming extinct? (Original post)
Yo_Mama_Been_Loggin May 2 OP
questionseverything May 2 #1
FakeNoose May 2 #2
qazplm135 May 2 #7
FakeNoose May 2 #9
qazplm135 May 2 #10
zipplewrath May 2 #3
Yo_Mama_Been_Loggin May 2 #4
markie May 2 #5
haele May 2 #6
dsc May 2 #8

Response to Yo_Mama_Been_Loggin (Original post)

Mon May 2, 2022, 08:16 PM

1. A long time neighbor just moved out of an apartment next door

They tried finding a house to buy for $110,000.

He said there was nothing in that range

They ended up renting a duplex for two grand a month

Omg 😳

This is a podunk town in central Illinois but prices have gone through the roof

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Response to Yo_Mama_Been_Loggin (Original post)

Mon May 2, 2022, 08:17 PM

2. To my way of thinking (I'm old) the only starter housing deals are older city properties

... that need a lot of work. Here's a hint: if the real estate agent steers you to certain neighborhoods, that's where the new, high margin homes are located. The bargains are in places where you have to go on your own because no real estate person will take you there.

If young couples are willing to put in the sweat equity - time and money - they can eventually see it pay off when they sell the house and move on. If they can't or won't do the extra work, there are almost no bargains left for grabs. Definitely none of the newer properties are in the lower/affordable price range that most young couples are hoping to get. Developers all want to build McMansions, or else apartment ghettos.

However some families have hand-me-downs, by that I mean properties held by parents or grandparents and deeded over to the kids for a low price. If you're lucky enough to be in one of those families - great! Most of us aren't.

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Response to FakeNoose (Reply #2)

Mon May 2, 2022, 08:47 PM

7. bigger cities

have deals in areas outside with new developments.

Relative term of course. I paid almost 20K over for my house last year but it was under 300K

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Response to qazplm135 (Reply #7)

Mon May 2, 2022, 09:01 PM

9. Well OK that sounds good

I bought a house in the city of Pittsburgh - nice, quiet neighborhood, nothing fancy. The house was 40 years old when I bought it and it's now over 65 years old. I paid $50K for it, and it's estimated to be worth about $150K now. At least they're saying I could sell it for that right now. My house isn't for sale, but I think I made a smart purchase when I had the opportunity. It's not easy for a single woman to get a mortgage but I came in during the Fanny-May bubble, and now my mortgage will be paid off in a few years.

My original point was this - had I looked around the suburbs, I wouldn't have found anything I could afford.

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Response to FakeNoose (Reply #9)

Mon May 2, 2022, 09:48 PM

10. I got lucky

house is now five years old, five bed, 3 bath, 260ish.

I had saved up enough to put about half of it down and still have money left over.

Great house, downside is I'm pretty far away from where things are hopping and too close to an area with some crime (although thus far haven't seen any where I am). They are literally building like ten houses right next to me now though so clearly the area is growing fast.

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Response to Yo_Mama_Been_Loggin (Original post)

Mon May 2, 2022, 08:22 PM

3. 20% down payment

There was a time that one was expected to put up 20% of the cost of a house as part of the loaning process. As such, "starter homes" were those so low cost that one could reasonably expect to have enough savings (or under the table loans from parents/family) to get "started". Once some equity has been accrued in a home, it would create the 20% needed for the purchase of a larger home. Once banks started giving essentially 100% mortgages, this process was no longer needed.

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Response to zipplewrath (Reply #3)

Mon May 2, 2022, 08:28 PM

4. I put 5% down when I bought mine nearly thirty years ago

Anything less than 20% requires mortgage insurance which is another monthly expense. This thankfully expires when you have at least 20% equity in your home.

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Response to Yo_Mama_Been_Loggin (Original post)

Mon May 2, 2022, 08:29 PM

5. out of control

here in Vermont... I want to move in the worst way, but am priced out of the few houses available


although I could afford to buy a mobile home park...

https://www.realtor.com/realestateandhomes-detail/1-Davis-Rd_Hartland_VT_05048_M92927-29854

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Response to markie (Reply #5)

Mon May 2, 2022, 08:44 PM

6. If you're going to buy a mobile home, try to pay cash.

Because you're going to end up paying lot rental and whatever the HOA might be, depending on the lot.
Also, be aware that investment firms are buying up mobile home parks and driving up prices to get rid of the working poor and elderly already living in these homes and attract the desperate middle class searching for homes in there to hoover up more money out of their pockets.
I live in a mobile home park. There are old 1000 sq ft. double wides from the 1970's going for up to $225k after a renovation and a 600 sq. ft single wide going for $90k.

None of these older homes qualify for VA or most other mortgage servicers. We bought ours cash as is for $25k eight years ago and spent another $30k in renovations to bring it up to code. And we pay $850 a month for lot rental and services provided by the park (clubhouse, pool, park area, grounds maintenance, security, etc...)

Haele


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Response to Yo_Mama_Been_Loggin (Original post)

Mon May 2, 2022, 08:55 PM

8. I got a new build, 3 bedroom, 2.5 bath for $192,500

and a USDA loan, in a small town in NC. I couldn't even find a new build here for under $250k and bidding wars are happening on existing homes.

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