I need help. What exactly is a starter house? The answer to this question determines our target buyer and influences our price floor.
Claire wrote a post awhile back about the starter house but none of those situations really apply to us. We didn't scrimp and save to buy this house. We had a list of "deal breakers" and "must haves" but what buyer - seasoned or new - doesn't?
Our first house felt like a starter house because we were kinda desperate to Own a House. Our second, and current, house is in a better, close-in, neighborhood, which means less house for the same amount of money we paid in the 'burbs. So...maybe this house is an upgrade for us?
Around here the "average 3 bedroom house" costs between 250k - 600k and our house will be priced within this range when we sell, but I don't consider these prices to be "starter prices" because the average buyer or, say a young family, can't afford to buy at these prices. So, I guess my real question is whether rising housing costs have killed the starter house market or are there certain homes that still fall within the "starter house" category?
4 comments:
I don't think there is such a thing anymore. I think there are a lot of factors that have kind of sucked the life out of the starter house:
1. Both sexes are buying houses as singles now - so the idea of a new couple buying their first home is not as common as before.
2. There's a lot of emphasis these days on size of house (the McMansions) so a lot of folks buy too much house too early - a 4000 sq ft "starter house" doesn't make sense.
3. People move around so much now. The idea of a starter house used to be to buy a small, affordable house and build equity until you have kids, buy house for kids where you live until you retire, downsize. But I don't know anybody that stays put anymore.
I think traditionally a starter house is smaller and in a less desirable neighborhood than where you ultimately want to be. When we lived in DC, we bought in Anacostia before anyone else was really buying there. Our particular street was a bit rough (Section 8 apts next door, gunshots at night), but it was the only housing you could find under $200k that was close to the city. It was a 3-bedroom, 1 1/2-bath townhouse. We lived there 2 1/2 years (bought when I was pregnant) and then sold it to another young couple who were starting out. We built an incredible amount of equity because of rising house prices and were really lucky to get out in 2005 before the market started to collapse. The people who bought it probably spent way too much, but maybe not since that area is being developed for a new baseball stadium.
I don't think there is such a thing anymore. Around here, there may be starter CONDOS, but not houses. I wonder how much it's because people get greedy ... the market so exploded, and people wanted to get every single penny out of it, so they did improvements to get more $$, and now all the houses NEED to bring in a certain amount of $$, or people won't get a return on their improvement investments. A vicious cycle (vicious to those of us who want to get into the market, and who would rather pay less and design the kitchen WE want!)
For a family my size (4 people, not just a couple thinking maybe a babe will come along in the next few years), there isn't even a starter condo. Which I find ridiculous, since our combined income next year will be considerably over $200K. Yet, until I can afford a cool million, I'll be a renter. That's after the market stagnated. It used to be $1.3 million.
I had crafted individual responses to each of you but I accidentally hit the "delete" key! But, I have to say, Z, those home prices are ridiculous!
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