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While $300k will go a long way in some towns it basically won't buy an empty lot in areas that feed into New Trier. OP has large downpayment and desire to use a 15 yr mortgage, half as much time as most borrowers sign up for.
Here are a few thoughts on your post, I hope these help. I think I can sympathize with where you are coming from and I can understand why you'd be concerned about these things.
Quote:
Originally Posted by JenniferFn
Most people who buy the lower quartile homes (under 2,500 sf) are younger parents around 30, and for them it's a starter home, and they usually move-up to something better and bigger by the time they are 45.
I'll disagree a little bit with this. I think the young parents buying these homes are more mid-late 30s, so they are not that much younger than you are. Very few people, even with high incomes, can afford something in that range at 30 since they are often only a year or two out residency, MBA program etc, and haven't had the time to accumulate the downpayment, pay off student loans, or get established enough in their career to commit to such a large purchase. Bottom line is you won't be so much older than the other parents.
As far as people moving up to something bigger and better, some people do and some don't. Even if people can afford a more expensive home after a few years, they don't always want to spend their money that way (especially given the poor returns in real estate lately) and may see no reason to move if they are happy/comfortable where they are. You won't be the only parents of high schoolers on the block, even if some families move away.
Also, "lower quartile" in Winnetka real estate prices does not necessarily translate to "lower quartile" among your kids classmates. Families in their 30s and 40s are more heavily represented among the cute smaller home crowd than among the mansion on the lake crowd.
Quote:
Originally Posted by JenniferFn
Will our kids feel like have-nots in Winnetka under this scenario? (I grew up in Deerfield and have no desire to live in Deerfield, Glenview or NBK, so please don't suggest that "we'd get more house for the $$" in those burbs, etc., no offense) Thanks for any input on my insecurities, are they justified? I figure if we get a nice, well-kept, older home in Winnetka, furnish it with high quality stuff basically once, that would make me happy, but I worry about the kids living in these smaller "have-not" houses all the way through teen years. We're looking in Hubbard Woods (Asbury, Vernon, etc.) and those houses off Hibbard: Cherry, Ash, Oak, Elm, etc. that have the smaller lots.
I think whether or not your kids feel like "have nots" has more to do with the example you set and the values you instill in them than whether or not some bratty kid in 7th grade says your kid has a "wimpy house." If you are constantly comparing your financial status to others, or give off feelings of inferiority or insecurity your kids will pick up on that and may feel like they are missing out on something. Even if you were buying a $2M house you could still have this issue as there will always be someone with a more expensive house, a vacation house, a big yacht... If you teach them that life is not all about money, how much money someone has is not a measure of their value as a person, and that appearances can be decieving, it will be much easier to deal with any concerns that come up.
On a more practical level, not every kid in your child's class will see your house. Probably only friends that come over for a playdate or neighbors. As far as keeping up with Jones goes, as long as your kids wear the same clothes and participate in the same activities, that is what everyone will see, not where you live. So, I think the concerns about "comparison" may be over stated.
Even among the more materialistic people that come over to your house, they won't know how much you make, how much you put down, how much you have in savings, or anything else like that. Not everyone chooses to live in the most expensive home they can afford, especially when they can get something pretty darn nice without stretching themselves. If anything, these people will notice that your house is well maintained and decorated nicely and not think too much beyond that.
This isn't to say there isn't going to be a bratty kid or a snotty parent who says something obnoxious at some point. Is that going to eat you up or will you be able to just blow it off as garbage coming from someone you or your kids probably don't want to be around anyway? The vast majority of people won't care whether you live in a $750k house or a $1.2M house. The main thing others will notice about your kids are what they are like. If they are friendly and nice to the other kids, and polite to adults, that will go a lot farther than having the biggest house and the most toys ever will.
One important to consider is whether your insecurities about being the "po folks" in town will hurt your ability to enjoy living there? Will you be comfortable making friends or you will be asking in the back of your head "is the nice lady I met at yoga judging me because her house is twice the size of mine and she has a couple of Lexuses?" Will you be able to enjoy going to community events or to the beach or will you be constantly thinking "look at all these people that have so much more $ than me!" Will you be embarassed to tell people where you live? If these things are goingto be difficult than maybe its not the best fit for you. If you are confident and secure and your kids are too then the fact that your familiy is not as wealthy as some others will not be a big issue.
Finally, will your income allow you to afford the other things in life you want to do like vacations, activities for the kids, saving for retirement or will you feel trapped by an expensive to maintain house, high taxes, and your mortgage? Based on your post and large down payment I think you know what you are doing financially and will probably be fine in this regard but I thought I'd mention it in case this is part of your concern.
One final thought. I'm speculating that some of your concerns may have to do with things you observed growing up in Deerfield. I think there may be more comparison/keeping up with Jones going on in places like Deerfield/Glenview/Northbrook since there is a greater spread of incomes among the families in those areas. You'd have to ask someone who is familiar with both Winnetka and those areas if this is true though.
Interesting points -- taken together point to time based changes....
Quote:
Originally Posted by shamrock847
..if people can afford a more expensive home after a few years, they don't always want to spend their money that way (especially given the poor returns in real estate lately) and may see no reason to move if they are happy/comfortable where they are. You won't be the only parents of high schoolers on the block, even if some families move away.
Also, "lower quartile" in Winnetka real estate prices does not necessarily translate to "lower quartile" among your kids classmates. Families in their 30s and 40s are more heavily represented among the cute smaller home crowd than among the mansion on the lake crowd.
...
... I'm speculating that some of your concerns may have to do with things you observed growing up in Deerfield. I think there may be more comparison/keeping up with Jones going on in places like Deerfield/Glenview/Northbrook since there is a greater spread of incomes among the families in those areas. You'd have to ask someone who is familiar with both Winnetka and those areas if this is true though.
I suspect that the insight into how things largely were for the OP growing up was a function of the broader economy and the mass of folks who probably were baby boomers among the OP's parents and their neighbors.
The significant changes in the way that real estate prices have retreated in some of the areas vs how they have remained relatively healthy in traditional higher end town actually fits well with the OP's desire for value and is contrasted with the fleeting appeal of more far flung areas. There really has been a sea change in how often wise home owners move-up vs finding a home that will comfortable for one's school aged children and beyond. The failure of so many government efforts to make achievement more uniform and otherwise manipulate people's drive to succeed also reinforce the sort of triumph of understated security that comes from having a large amount of equity in a town with stable values where superior achievement is lauded.
While $300k will go a long way in some towns it basically won't buy an empty lot in areas that feed into New Trier. OP has large downpayment and desire to use a 15 yr mortgage, half as much time as most borrowers sign up for.
$300k will go a long way in most towns lol. If your willing to get a "less nice" house then you can find some good ones out there. Or why not get a $500k house and have even less of a mortgage?
$300k will go a long way in most towns lol. If your willing to get a "less nice" house then you can find some good ones out there. Or why not get a $500k house and have even less of a mortgage?
As I said in my previous post about the sea change that has occurred in the real estate markets and the subsequent shocks this is having in minds of real estate shoppers I can understand how the OP wants to sorta have a "bullet proof" level of equity and isolate themselves from any kind of negatives by selecting one of the the single most desirable towns in the region.
OTOH I also agree with the more conventional thinking that mattywoe is advocating, for an even less expensive home. There are, however, vanishingly small numbers of habitable homes available in Winnetka under $600K and many of these homes truly have "un-remediable" negatives like being squashed up against a gas station or busy road.
At some level the OP's desires are driven by emotion / non-conventional concerns and I don't think there are whole lot of people that would accept the compromises that come from having a home priced in the lower reaches of a town that is among the priciest in the region, and given the VERY low rates on 30 year mortgages it is even harder to justify sinking a TON of cash into such a home BUT if that is what the OP wants to do the only real downsides are the POTENTIAL loss of return on investing the cash for downpayment and similar "opportunity costs". There is some real charm to the smaller older homes in a nice area: 1259 Cherry St, Winnetka, IL 60093 MLS# 08006596 - Zillow 1228 Oak St, WINNETKA, IL 60093 | MLS# 08098008 | Redfin 311 GLENDALE Ave, WINNETKA, IL 60093 | MLS# 07897543 | Redfin
$300k will go a long way in most towns lol. If your willing to get a "less nice" house then you can find some good ones out there. Or why not get a $500k house and have even less of a mortgage?
Not on the North Shore though. Just because 300k will go a long way in some areas does not mean Op wants to live in those areas. In the more desirable areas in Chicagoland 300k does not get you very much, and Winnetka definitely falls within that category. It's stunning, excellent schools, near the lake, nice, historic houses...you pay a price for charm.
At some level the OP's desires are driven by emotion / non-conventional concerns and I don't think there are whole lot of people that would accept the compromises that come from having a home priced in the lower reaches of a town that is among the priciest in the region.
In my experience selling real estate and renting out homes to tenants the VAST majority of shoppers / renters far prefer "new" homes or homes that "look new" to those that have the appearance of being built / lived in for decades. Even in pricey areas this largely holds true and helps to explain the "tear down" phenomena -- buyers get the amenities / visual appeal and other benefits of an established community while their own home starts out as a "clean slate". The list of things that MOST buyers similarly won't accept as compromises include the room sizes of older homes, especially things like tiny /non-existant master baths, garages that were designed for one or two mid-sized car instead of a fleet of SUVs and sports storage for multiple seasons, light fixtures that merely 'glow' instead of serving as landing beacons, whole home surround sound and all sorts of 'modern' time and money wasters... I have lived in both older homes and newer homes and see financial and emotional trade-offs for both -- newer homes that are built well (and some, but not all, are...) can be less expensive to maintain / heat / cool than older homes. Tasteful designers can build-in / add-on lots of charm, with enough money craftsmen with "old world" skills can do things "like the used to build 'em".
Problem is at the price point of >$750k in a very pricey town like Winnetka odds of getting a well done home built recently are close to zero. Older homes are generally all that will be available.
Of course there are buyers that see the value in older homes and some folks really do seek them out, but they are a small subset of buyers. I classify these values as "non-conventional" in this context. As long as you know what you are getting into, have all the system checked out by professional inspector(s) and verify that any additions / renovations were done with care the relative utility of such a home is still excellent. You really get everything anyone would need.
The last part of the equation suggested by the OP and challenged by posters that suggest just getting a home for cash is different. From a purely financial perspective it is really hard to argue in favor of making either a large down payment, as lenders really don't offer any financial benefits to those putting down more than 20% nor are their many purely financial benefits to utilizing a 15 year loan when the rate difference for 30 year loans is so very small. That said I would never criticize buyers doing either, as the "peace of mind" is something that you don't calculate on a spreadsheet... And having $300k will not buy a vacant lot in Winnetka or likely any other town that feeds into New Trier.
using 1228 Oak as a case study....what other than the one-car garage is compromised? We're coming from Chicago where the std. lots are 25 x 125, so this type of place doesn't seem that limited and the backyard comparatively palatial. Most of these owners have kept houses up and renovated baths and kitchens along the way, right? You can't get a new house in LakeView, Lincoln Sq., Bucktown, or LP in the city either, for the price range we are discussing. At least you get non-CPS schools in Wilmette/Winnetka.
The house that sells the best nationally is a three bed, two bath, with an attached 2 car garage. Every thing else is a bonus. The question for you is how many other houses in the 1200 block of Oak Street also have a single car garage?
If one is looking at a house that has been empty for a year, and it still on the market, the buyer should be suspicious. It is an entirely different situation than a house on the market for a year with owners living in it.
There is nothing wrong with buying an older house that has "good bones" and had regular maintenance. It is not a bad investment. The majority of the upgrades are generally cosmetic in nature and do not have to be completed before the buyer takes possession. The problem with any empty house in IL that has not had utilities on for a long period of time is often hidden mold that is not found in visual inspections. It is found in a mold inspection and it is generally very expensive to remediate. Few buyers anticipate spending thousands of dollars to rid their house of mold spores after the purchase. The $500 test before the purchase is cheaper than the sorrow. We did that three times before we bought the present house. They all had the right stuff, and they all had that little hidden surprise.
The Illinois contract we signed included a check-off sheet that clearly listed mold inspection and house inspection that could be included as a condition of purchase. Whether that is included in Cook County contracts or not, I do not know.
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Interesting points -- taken together point to time based changes....
