Making it in Massachusetts (Boston, Quincy: low income, apartments, foreclosures)

[Carrie0930]

I was having a discussion with a coworker the other day about how hard it is to make it in Massachusetts nowadays.

I'm currently living in a 500ish sq ft 1 br/ba apt in the Quincy area and pay $1025 rent/month. My FI wants very much to buy a house and doesn't much want to get married without buying a house first. We currently make about $85,000/yr gross together with $600 in student loans total and I have some (manageable credit card debt which I'm working on paying off) and no car debt. I have done out some of the housing calculators online and based on our salaries and the condition/prices of houses around here, it seems like it would be downright impossible to ever afford a house in this area. Neither of us are handy around the house so a fixer upper would not be an option. Moving west of Boston is not an option (not something FI would consider) and moving north, as appealing as NH is to me, I cannot fathom voluntarily moving to an area that gets more snow than the south shore (we get enough as it is). We are looking at jobs to possibly increase our salaries considerably if we managed it and say best case scenario we were able to increase our salaries from gross $85,000 to gross $120,000, I thought then we'd be able to afford something for sure because we could pay down debt and save faster, but I saw something on another board on here where someone made $72k and his gf $45k and the posters there were saying that he should be considering a house/condo in the $250k or less range.

So, where are all the people in MA getting all this money? Does everyone except me make $100k at their jobs? Is everyone paying more than they should on houses because they are so expensive? Should I just give up and move away to a cheaper area (I feel like MA has one of the biggest disconnect, at least in my experience between salaries and cost of living).

And then everyone says to not even think about buying a house and rent instead but my current apartment drives me nuts sometimes. It's pretty small, we don't have guaranteed parking and we don't even have a dishwasher. I know I sound snobby complaining about all that but sometimes I just feel that way. The only good part about it is we are on a tenant at will deal and the landlord never raises the rent (at least not in the past few years). We could live in a nicer apartment but then we'd be paying minimum $1200/month for rent and saving even less money.

[Beachcomber4]

I feel bad for you and upcoming generations of people who want to own a home. Best advice is save as much as you can, pay off your debt and watch alot of DIY and HGTV. Start hanging out in pubs in Quincy and befriend the guys in work boots. LOL Bartering is going to be back in vogue. There are bargains out there and there will be more to come. A fixer upper might seem daunting but it can be done. It's also the quickest way to build equity and give yourself the opportunity to go from starter home to move up home. Most home repairs are not rocket science and honestly, I think your generation and the next is going to get a lesson in "making do" and "learning to live without instant gratification". Homes will not be picture perfect from the day they move in and the kitchen won't be worthy of a 5 star restaurant. Hopefully people like you who seem to be responsible will be able to find programs where you can get a mortgage without a huge downpayment as a first time buyer. You pay your bills, you are contributing to the economy, you deserve a break. I would hope that someone could come up with a program where maybe in some of these blighted, neighborhoods that are overrun with foreclosures young people could be enticed to move in and put down roots to revitalize those areas.

[QuilterChick]

Good points above from Beachcomber. The Boston / Quincy area is very expensive cost of living. A relative of mine sold an attractive, but run down, two family in Quincy for just under $500,000 two years ago. A tool belt guy bought it and gutted the 2nd floor, is renting out the first floor 3 BR unit for $2200 a month after he rehabbed it. I was floored at that rent. But the place is a jewel now. He must have put at least another $75K or more into it. But... he had sold another property with equity. First time buyers have very little down payment and have to take on huge debt if they want a house.

If the OP is free to relocate, why not go to an area with a lower cost of living, rent, save, then buy and build up equity. Granted they may not bring in big salaries, but they will do just fine and be a lot more comfortable and get their own home a lot sooner than staying near Boston. The outskirts of big cities in NC, VA, TN, SC -- all beautiful areas and in most of the larger cities, just as much culture as there is near Boston, without the population density and stress, and top medical facilites. University and college towns in the mid Atlantic states are attracting jobs and have a lot to offer. The northeast is tax hell.

[Jamesnana]

There are many areas on the South Shore that are affordable on $85,000 a year. You might have to save $20k for the down, but 5% or 3.5% down financing is still available. Your student loans are a little heavy, but most lenders consider them "good debt." Weymouth, Abington, etc have a lot of condos available that are affordable. If you want a house, you might have to go further south. Rockland, Hanson, East or West Bridgewater, Whitman--all these and more if you really want to buy a house.

The first thing I would do is try to find a cheaper apartment so you can save some money. Check out Craigslist or the Ledger. They are out there.

[in_newengland]

I sympathize totally and I don't think there are cheaper apartments out there. Rents are going higher as people hang onto their houses, waiting for the prices to go back up.

CL has mostly apartments starting at $1500 for a one bedroom. If you read on other state forums, a lot of them have apartments for $800.00.

To the OP, either leave MA as so many others have, or just hang in there and sacrifice, be extremely frugal. Don't be afraid to buy a small house that needs some work -- I mean painting is simple and you can live with a bad kitchen for a while. Mow your own lawn, take care of the yard -- sometimes I can hardly believe how many people pay someone else to do the simple things that they could easily do themselves.

[Jamesnana]

Just went on Craigslist and searched for 1BR under $800 under on the SS, and came up with 2 pages worth--some of them rent to own. Now they may all be hovels, but maybe not.

According to the CNN calculator, with your income and debt with 15K down, you should be able to afford between $300-325,000 for a home. I know they are out there. A friend of mine just bought a pristine little cape in Hanover for $322,000. It wasn't huge but at 1229 sq ft it's way more than you are used to. The home inspector couldn't find a thing wrong with it, it had all been renovated. It is absolutely adorable.

As a single mother on a low income, I made it happily in Mass. I'm sure you can, too.

[QuilterChick]

Originally Posted by Jamesnana

Just went on Craigslist and searched for 1BR under $800 under on the SS, and came up with 2 pages worth--some of them rent to own. Now they may all be hovels, but maybe not.

According to the CNN calculator, with your income and debt with 15K down, you should be able to afford between $300-325,000 for a home. I know they are out there. A friend of mine just bought a pristine little cape in Hanover for $322,000. It wasn't huge but at 1229 sq ft it's way more than you are used to. The home inspector couldn't find a thing wrong with it, it had all been renovated. It is absolutely adorable.

As a single mother on a low income, I made it happily in Mass. I'm sure you can, too.

Online calculators are just not reliable. Taxes on a $300K home in Mass. would be over the top plus a hefty mortgage, property insurance and daily living expenses, repairs, utilities, heat etc. If children come along, bingo ... day care, medical, yada yada. By the time someone saves $15K or $20K (which is only 5% down, and then you're into PMI), mortgage rates will have risen, it's all an unknown.

The OP or anyone in that situation paying exhorbitant rent in 500 sf. should go to a good bank and get qualified by the loan officer if they want to purchase a home in this economy. A pre-qualification is what is needed here so they know how much they could afford; then look for something less than they are qualified for to have some wiggle room in mo. payments.

Or, get a nicer apartment for another two years until the economy (may) get better, and pay a little more rent, be more comfortable and hopefully get a higher income in the meantime. Not everyone has to own a house right away.

[massnative71]

Originally Posted by Jamesnana

There are many areas on the South Shore that are affordable on $85,000 a year. You might have to save $20k for the down, but 5% or 3.5% down financing is still available. Your student loans are a little heavy, but most lenders consider them "good debt." Weymouth, Abington, etc have a lot of condos available that are affordable. If you want a house, you might have to go further south. Rockland, Hanson, East or West Bridgewater, Whitman--all these and more if you really want to buy a house.

The first thing I would do is try to find a cheaper apartment so you can save some money. Check out Craigslist or the Ledger. They are out there.

I agree that a condo is probably the best way to go in your situation. The maintenance will be much simpler than a single family, lower utility costs, lower taxes and you will get yourselves into the housing market and start building equity.

[Carrie0930]

Originally Posted by QuilterChick

Good points above from Beachcomber. The Boston / Quincy area is very expensive cost of living. A relative of mine sold an attractive, but run down, two family in Quincy for just under $500,000 two years ago. A tool belt guy bought it and gutted the 2nd floor, is renting out the first floor 3 BR unit for $2200 a month after he rehabbed it. I was floored at that rent. But the place is a jewel now. He must have put at least another $75K or more into it. But... he had sold another property with equity. First time buyers have very little down payment and have to take on huge debt if they want a house.

If the OP is free to relocate, why not go to an area with a lower cost of living, rent, save, then buy and build up equity. Granted they may not bring in big salaries, but they will do just fine and be a lot more comfortable and get their own home a lot sooner than staying near Boston. The outskirts of big cities in NC, VA, TN, SC -- all beautiful areas and in most of the larger cities, just as much culture as there is near Boston, without the population density and stress, and top medical facilites. University and college towns in the mid Atlantic states are attracting jobs and have a lot to offer. The northeast is tax hell.

I have considered it. If a good paying job were to crop up in VA or NC I think I would jump at it. In fact, the gentleman I was discussing this topic with at work was living in TX working for 4 years and he said that it put him in much better financial shape because all he was doing was putting money away due to his good salary and everything being so cheap.

[capecodcathy]

One of the other things to focus on is your credit rating. Make sure it is the best it can possibly be. This will affect the interest rates offered to you by a lender which could make a marked difference in your monthly payment.