Interesting article - Death of the Starter Homes (renting, HOA)

[Cardiff by the Sea]

[quote=kiggy;40967181]Any parent who would co-sign for a mortgage for their kids needs intensive psychological treatment. And I bet that $100K 30 years ago would be about $300,000 now.[/QUOTE]



Actually it would be $222,993.35.


http://www.dollartimes.com/calculators/inflation.htm

Here is a calculator. You put $100,000 in the first box, 1985 in the second box, and 2015 in the third box.


But that assumes houses increase in value at the rate of inflation. In high appreciation areas, the increase is more. Our house in California tripled in value in 25 years.

[kiggy]

Pretty cool little tool, Cardiff! Now do you have one that will prevent parents from co-signing loans?

[motordavid]

Nice link, Cardiff!
Our first house, a decent used rancher with a huge backyard and wide lot, cost $22Gs in 1971, East Lansing, MI, post college and a yr of grad school.

Our first new house cost $40,000 in 1975, when I was transferred to the NYC office. (We lived in NJ).

I realize things and situs and 'stuff' was different 40-45 yrs ago, in terms of today's buyer that yells "I've got to have all the accoutrements and gizmos now", but neither house was really lacking for what we needed, and both houses had the usual non-luxury stuff of the day.

Today, the 'basic houses' have laundry rooms have granite, a couple of wine coolers, all baths have granite or quartz, and on and on and on...Dunno who is going to be buying all of 'our houses', in a half gen or more, when most of us are in the dementia center, or worm food.
GL, mD

[imagardener]

Thanks for the interesting inflation calculation from 1985 to 2015.
I've read that wages have not kept up with inflation though so buying power has either been stagnant or in some cases gone down for many people (not all of course).

Not sure where to find the information to compare the average buyers income to the average house cost of different time periods but my sense is that many younger people have been priced out of buying a home based on their income. A parent co-signing may be a necessity.

[Restrain]

Part of the problem is the government regulations (minimum house size, more required elevations,) along with "impact fees" which are just more taxes which drive up the cost.

Right now, there is inventory of 'starter' homes, so there is less need. However, the over-55 group that are downsizing are not often looking at the inventory that a young family would look for. Rather, they are looking for something often in a HOA, very low maintenance. There is new construction going on in these developments.

[craigiri]

It all depends where you live.
Our daughter bought a starter house in Oakland, CA (bad area) for about 320K.
Our son bought a starter house in Pitt. for $115K

In Pittsburgh there are literally tens of thousands of young people buying houses from 40K to 200K as first houses. Of course this is not so in the Bay Area, N. Jersey, etc.

I'd say there is some trend toward smaller houses. However, it a demographic thing....it seems some places (Atlanta, Charlotte, some other burbs, etc.) still have demand for McMansion-type homes (4,000 sf, etc. often on small lots).

However, if you look at places where demand is high you can often find that location trumps house size. In Rhode Island (the actual island, which is high demand), you can buy a 4,000 sf house for the same price as a 2,000 sf condo with a slightly better location. Out here in W. Mass you can also buy a 3,000+ sf house (that's considered very large - Yankees are thrifty and reasonable) for less than you can buy a nice luxury townhouse or condo.

There simply isn't much demand for the large houses here - for various reasons.
It's a fact that families of multi-generational Americans are getting smaller. It's very normal these days to have no kids or one kid. It's also normal to be single your entire life!

We have a decent size house here and when we go to sell we just have to hope that some doctor or similar family person decides they want the older "American Dream" - that is, a nice house on an acre in a cul-de-sac.

[pltrgyst]

Originally Posted by craigiri

....In Rhode Island (the actual island, which is high demand)....

Where is that, exactly? Aquidneck?

-- Larry

[Alishasharie]

Very interesting thread. I am an older millennial living in CA and I just bought my first home in FL and am moving there in a couple weeks. I'd never be able to own a home here in CA unless I moved to the worst of the worst areas. I live in a nice town where the oldest crappiest homes start at $400,000. I decided to try and be smart and get ahead and bought a home for $100,000 in FL instead. It's a historic home, built in 1925, only 2 bd 1 BA, no modern updates. Not all millennials are spoiled brats. We've been hit hard coming out of college with no jobs and many of us are frustrated that the "American Dream" that our grandparents and even parents were able to attain is out of our reach. FL may be a big downgrade culturally for a young person, but financially it's a good move. Many of us want small homes we can actually afford and aren't very excited about the idea of a 30 year death sentence mortgage that will be very difficult to pay off with the job market being the way it is now. This is why tiny houses have become so popular with our generation. HGTV isn't reality.

[bbronston]

I think "tiny houses" are pretty cool and I actually lived in a 70s version for a time after graduating from college back then. If it was possible from a zoning point-of-view for a builder to purchase a block of parcels closer to town and develop an enclave of tiny houses (not MH, true houses), maybe with a common park or pool, and priced appropriately....they would sell so fast it would make heads spin. Obviously, it would need to be profitable enough to make it worthwhile (and that is probably the rub) but there is no doubt in my mind that there is a need and a call for it.

[Alishasharie]

I agree. There seems to be a good selection of starter homes in this area though compared to where I live anyhow. Another thing I noticed is that so many of the homes there have guest cottages. I'm not sure what the regulations are for renting those out but in Sonoma county, CA that's become the big thing for tiny house living. Everyone is putting a tiny house in their backyard and either renting it out for extra income or living in it and renting out the main home to live mortgage free. Initially I was looking for a home with a guest cottage in the Bradenton Sarasota area but then I found my little historic cottage and was sold. It has a cement pad in the backyard and I'm guessing there was once a garage or guest cottage at one time.