Buy a House in Swampscott, Newton or Winchester? (Boston: real estate, foreclosure)

[WhereToBuy]

Hi,

My wife and I are thinking of starting a family, and given the current housing market, thought it would be a good time to buy our first home as well. We've seen houses all over the place, but the few that really have caught our eye are in Winchester, Newton and Swampscott.

The Swampscott house is cheaper, but seems be be in a busier part of town (close to the new High School), and has less total space (i.e. 1 car garage, smaller kitchen).

The Winchester and Newton homes both clock in near the $750,000 mark, but are older homes, though they provide much space. I think the school districts are better here as well.

We're really confused and not quite sure what to do. We need to further research school districts as well, because most of our savings will go into this first house, we want to try and limit the potential of it losing value (though we understand there are no guarantees).

Any and all help appreciated!

Thanks in advance.

[Urban Peasant]

All of these are upperclass neighborhoods that are very safe. The schools are all good as far as I know. The problem with Swampscott to me is that you have to go through either the harbor tunnels or the Tobin Bridge to get into town and it can be a slow commute not to mention paying a toll. If you don't mind that or have no intention of commuting to downtown Boston, then it should be good. All three towns are served by commuter rail and commuter bus routes that feed the subway, depending on where you're at Newton also has one rapid transit line.

[scarletfire]

I'd consider resale value as well - given that more people are focusing on the kitchen when they buy these days I might lean toward one of the homes with a larger kitchen, but of course that's just one factor. However, I would say this:

I'd research the towns and school districts first before settling on a home. It's easy to fall in love with a home and then find you don't really care for the community. There are so many homes to choose from these days you might be better off taking a step back and really exploring the towns, talking with someone at each of the school depts, maybe talking with a few locals in each.

Anyhow, I hope that's a a little helpful! Best of luck!

[eolicom]

a $750000 house can only loose value nowadays.

[MichelleLane]

I don't know that I would agree that a $750K house would lose value. It all depends on where you are spending your money. The irony is that in a town where $750K would not buy much, the values have not been hit that hard. In part because those are towns where subprime loans were not prevalent and, therefore, there is not a high rate of foreclosure. And so not a flood of bargain properties on the market. If you check the data on this site, you will see that the average house price in Newton and Winchester have both spiked in the last couple of quarters. If it were a town where $750K would buy you one of the best houses in town, then I would agree, which might be the case for Swampscott. You know the real estate adage - buy the cheapest house on the street - and the other houses will bring up the value of your house in a higher proportion.

Your criteria about how you live your life are probably the most important - Where do you have to commute to for work? The other most important things to consider in home value are lot, location and layout. Location is the one you are trying to figure out and that entails so much - whether you like being in walking distance to shops or you like to be on a secluded suburban street, Whether you are on a main street or a nice, quiet street, whether you have to go through a lot of traffic to get to major routes, etc. Lot - is the yard big enough? No strange factors? With older homes, there are sometimes strange setups due to loose zoning laws back in the day. I have seen things I would not want, like shared driveways, houses really close to the property line, etc. People like nice, clean square or rectangular lots where the house is pretty much in the middle of the lot.

Layout - this is a big one. Today, people like open layouts with good size rooms and good flow. I moved from a 1948 colonial to a 1925 one because the older home had a much better layout, a vestibule, much bigger foyer, etc. Higher ceilings seem to be a demand item as well.

An older home could be good because they usually have these characteristics and you can often get them for less and put your own sweat equity into them to increase the value.

I hope that helps.

[WhereToBuy]

Originally Posted by MichelleLane

I don't know that I would agree that a $750K house would lose value. It all depends on where you are spending your money. The irony is that in a town where $750K would not buy much, the values have not been hit that hard. In part because those are towns where subprime loans were not prevalent and, therefore, there is not a high rate of foreclosure. And so not a flood of bargain properties on the market. If you check the data on this site, you will see that the average house price in Newton and Winchester have both spiked in the last couple of quarters. If it were a town where $750K would buy you one of the best houses in town, then I would agree, which might be the case for Swampscott. You know the real estate adage - buy the cheapest house on the street - and the other houses will bring up the value of your house in a higher proportion.

Your criteria about how you live your life are probably the most important - Where do you have to commute to for work? The other most important things to consider in home value are lot, location and layout. Location is the one you are trying to figure out and that entails so much - whether you like being in walking distance to shops or you like to be on a secluded suburban street, Whether you are on a main street or a nice, quiet street, whether you have to go through a lot of traffic to get to major routes, etc. Lot - is the yard big enough? No strange factors? With older homes, there are sometimes strange setups due to loose zoning laws back in the day. I have seen things I would not want, like shared driveways, houses really close to the property line, etc. People like nice, clean square or rectangular lots where the house is pretty much in the middle of the lot.

Layout - this is a big one. Today, people like open layouts with good size rooms and good flow. I moved from a 1948 colonial to a 1925 one because the older home had a much better layout, a vestibule, much bigger foyer, etc. Higher ceilings seem to be a demand item as well.

An older home could be good because they usually have these characteristics and you can often get them for less and put your own sweat equity into them to increase the value.

I hope that helps.

Thanks, that definitely does help, and has us thinking we should keep looking around. The allure of the Swampscott house is that it isn't fully constructed yet, so we can customize it to our liking, but that doesn't change the fact that its pretty close to the main road, and the drive in and out is a bit of a challenge. I guess there is a fine line between 'compromise' and 'balance' and that is one we're trying to figure out.

While the commute to the Financial District (where I work) is not ideal, being able to get to work within 45 minutes isn't that bad either.

Maybe renting a little longer wont kill me! Then, maybe in a year or two, with some extra savings (i.e. larger down payment) we'll be able to get into a house that has all the things we're looking for.

[smarty]

Originally Posted by WhereToBuy

Maybe renting a little longer wont kill me! Then, maybe in a year or two, with some extra savings (i.e. larger down payment) we'll be able to get into a house that has all the things we're looking for.

Can I ask you the reason why you want to buy instead of renting?

The cost of owning... is expensive... not only do you have to pay mortgage... there are maintenance fee (lawn, snow, ...) and property tax. I was looking at a Condo in Newton... $600K + another $1000+ for tax and condo fee... I can rent the same place for $2500.... This means... I'm saving a couple thousand a month.

[holden125]

Originally Posted by smarty

Can I ask you the reason why you want to buy instead of renting?

The cost of owning... is expensive... not only do you have to pay mortgage... there are maintenance fee (lawn, snow, ...) and property tax. I was looking at a Condo in Newton... $600K + another $1000+ for tax and condo fee... I can rent the same place for $2500.... This means... I'm saving a couple thousand a month.

This is of course a complex issue that depends on someone's personal situation (for example, for someone in a high income tax bracket the tax benefits of mortgage interest deduction are greater), but it's exactly right that in the Boston area the cost of owning has been higher than the cost of renting for a while now. I know several people trying to rent out places they own and being able to command only about 2/3 of what they have to pay themselves.

The 600K condo Smarty speaks of would be over $3000 a month in mortgage with a standard 20% down fixed 30-year mortgage, plus $1000 in tax and fees. Not only is it $1500-$2000 more every month than the cost renting the same place, but the $3000 figure assumes that you put 20%, or $120,000 cash, into it. If you rent you can continue to hold (and collect interest on) your down payment savings AND the $1500 you can save each month. You're also on the hook for any repairs that need to be done, etc., and if you lose a job or have to relocate it's a lot harder (and potentially more expensive) to unload it.

In the past few years, people buying have fallen into 2 general categories: those who could actually afford the monthly payments and those who really couldn't without some kind of gimmick mortgage. If you can't really afford the payments, or if it's a stretch, it's not a great idea to be buying the place. If you can afford it (such as you could afford the $4000+ a month in Smarty's example), I'd still advise renting for the moment and taking the extra $1500 and saving it in an account with a decent yield separate from your normal accounts, rather than just spending the money. You will have a much larger down payment (over 2 years at $1500 a month, it would be $36,000 additional saved plus interest on that money and on your current funds for a down payment).

It's true that Newton and Winchester are less likely to lose value. Swampscott is a little different, though it too should be fairly stable. Places where I'd expect to see big drops would be the recently-booming exurbs and some more marginal places where people unable to swing buying in the more desirable towns during the boom had started to buy. The big question, on which the jury is out, is whether towns like Newton and Winchester will go UP so much in the next 2 years that an extra $30-40,000 down won't help as much.