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The Yahoo link to the blog doesn't work, so a link to the article/blog [post would be helpful.
but read this again, and tell me if it's journalism, or sensationalism:
I know right? There is a difference between older and literally red tagged.
We may be remodeling our temporary home (a ‘69 ranch in a great location) before we move in, but that’s for our comfort, not because it was uninhabitable. Yes, it needed new wiring and a new hot water heater to be brought up to code for this decade, but it’s not like the guy living there before us was setting campfires in his kitchen to stay warm and bucket flushing the toilet
One of the things that people also don't realize is how staggering student loan debt has affected young people's ability to buy real estate. When you have a student loan of $200-$500 a month, it eats up a big chunk of what you are able to qualify for in a mortgage.
Absolutely. It's not necessarily the overall debt level that's the problem - it's DTI. A $500 student loan payment is doable if you're netting $5,000/month. If you're netting $2,000/month, it's crushing.
1. what's the average repayment term (10 years?)
2. do they ever equate - upfront preferably - what the amount borrowed will be in a monthly payment? Do young folks ever ponder "This debt is going to require me to earn $X out of college so I can comfortably repay it"?
I'm probably going to far off topic. Where does one find the student loan problem discussion?
The "starter" home here is about 30 years old, 1,600 SF on a 12,000 sf lot, and goes for the $500-600k range after a bidding war. The median home price is now at $962,000.
I think this gets to the heart of the problem. "starter" homes aren't "starter" homes.
A starter home is 1000 SF, on a 4,000 sf lot, with a 1 car garage or a carport. However, what's being built are 2,500 sf homes, on larger lots with a 3 car garage dominating the entire front face of the house.
A 12,000 sf lot should have been divided into 2 or 3 lots for 2 or 3 homes. This is particularly true since families usually aren't more than 3 or 4 people rather than the previous norm of 5, 6, or 7.
The other issue, as more people desert rural areas and crowd into about 20 large coastal, or near coastal, metro areas, is that the starter home will necessarily be reduced to a condominium. People haven't accepted that yet.
1. what's the average repayment term (10 years?)
2. do they ever equate - upfront preferably - what the amount borrowed will be in a monthly payment? Do young folks ever ponder "This debt is going to require me to earn $X out of college so I can comfortably repay it"?
I'm probably going to far off topic. Where does one find the student loan problem discussion?
The problem is 17-18 year olds just shy of a high school diploma are being asked to make this decision. How many teens have even dealt with any sort of loan before?
Plus costs are rising so quickly. My dad went to Clemson as an out of state student in the late 70s. I didn't see tuition dating that far back but here's date stretching back to the mid 80s. Adjusting for inflation and you can see even in state students are paying far more than out of state students a few decades ago. The in state rate from 1985? Students today could only dream of paying 4K for a Clemson degree. There's all this talk about students should stay in state but even those schools have gotten more and more expensive. Same story at Georgia Tech. $1500 in the mid 80s is about $3500 today but in state tuition is now topping $10,000. Adults giving advice on college costs are often out of touch with how much it costs now. What worked in the 70s and 80s and even early 90s won't necessarily work today. I would think (or at least hope) that college/career counselors in high schools would have a better understanding, but for a school of 3,500 students, we had one college counselor.
As for starter homes, my parents just downsized last summer. They went with a house that hadn't been touched since the 80s and needed basically everything replaced. I don't know if it technically qualifies as a starter home, but it was a struggle looking for houses. Everything in their price range that was basically turn key was having an offer or multiple offers the first day it was listed. Fortunately they were able to wait it out since they didn't have to worry about getting kids into school by August or anything like that. They even thought about a house that was nearly gutted and needed a lot of work. It had been on the market for almost 2 months (an eternity for that area over summer) but the owner wouldn't budge on the price.
It depends what you mean by starter home. To me it's at least a 2/1 and the lowest priced one that has not been updated but would qualify for FHA financing, meaning everything works and passes inspection, meaning roof, plumbing and electrical.
If you look at the kind of homes built in the post-war baby boom, you will notice that they. Were. Tiny! There was a development near St. Louis that built and sold two and three bedrooms and one bath houses to Catholic families. Someone I know grew in one of them in a family of seven and said that they would knock out closets and have bunkbeds. When they saved enough money, they finished their basement, and some people sometimes even converted the garage into living space.
A four bedroom three bath house is not a starter home. You also don’t need a brand new house for your first home. The problem is that new houses are often 2000-3000 square feet; developers aren’t building attainable, affordable houses. What will the housing market be like in 20, 30, 40 years? There won’t be any reasonably priced houses in decent shape.
One of the things that people also don't realize is how staggering student loan debt has affected young people's ability to buy real estate. When you have a student loan of $200-$500 a month, it eats up a big chunk of what you are able to qualify for in a mortgage.
In the Atlanta market, a home in the $200K's is getting multiple offers, even if it's a shack, because investors with lots of cash (think international money) will snap it up, slap lipstick on the pig, and unwary buyers will buy it. An agent in our office had one last week for $237K that had 18 offers within 24 hours. Unless I know the builder, I am extremely wary of flips -- I've seen so many that were poorly done, and make the house a more expensive proposition in the long run. (I went to see one house where every single doorknob to exterior doors were not fitted -- i.e., you could see DAYLIGHT where the doorknob didn't meet up with the drilled hole in the door. The "deluxe, new" kitchen cabinets were installed so poorly that they SCRAPED THE CEILING of the kitchen when you opened the cabinet. Unscrupulous flippers will simply paint over mold, not fixing the cause, and buyers wonder four months later where that mold came from -- uh, from the leaking pipe behind the wall that the flipper didn't fix, duh.) It's getting pretty bad when people buy flipped homes in order to renovate them for themselves -- but that's what's happening around here.
Even in NJ at the height of the boom small older houses were going for $300K. And I mean a tiny house, one had a living room that could not have been more than 80 sq feet, a small eat in kitchen, stairs in the middle , a tiny bedroom on the other side of the stairs and a small bathroom and a second floor that I never saw but had 2 small bedrooms with dormer windows so they were attic height.
If you look at the kind of homes built in the post-war baby boom, you will notice that they. Were. Tiny! There was a development near St. Louis that built and sold two and three bedrooms and one bath houses to Catholic families. Someone I know grew in one of them in a family of seven and said that they would knock out closets and have bunkbeds. When they saved enough money, they finished their basement, and some people sometimes even converted the garage into living space.
A four bedroom three bath house is not a starter home. You also don’t need a brand new house for your first home. The problem is that new houses are often 2000-3000 square feet; developers aren’t building attainable, affordable houses. What will the housing market be like in 20, 30, 40 years? There won’t be any reasonably priced houses in decent shape.
Agreed, the issue now is two-fold. First, new homes are just too big, and second, the designs of furniture are not conducive to the styles of older homes. The furniture is just huge. In an older/smaller home, you have to have furniture to scale that will fit the area. You also have to have appropriately scaled rooms, which a lot of new builders don’t seem to be doing in construction. I see newer condos/apartments that are not very big but something like 1/2 of a relatively small floor space is taken up with a kitchen/bathroom while there is no room for bedrooms, living space, etc. Older homes would have had more space focused on the living areas and less on the kitchen and bathrooms.
I know in my area, the choices are either homes that require extreme renovation because they haven’t been updated since they were built in the ‘60s or really bad flips. I had one coworker who was planning on a conventional loan and she just gave up because the choices were awful. Another coworker downsized to a smaller ranch and ended up doing the extreme renovation approach. Our mid-range is townhomes, which tend to be newer and need less renovation, but then you have to worry about HOA fees and special assessments. Many are quite spacious. However, my coworker said when she was looking, nothing was in a range acceptable to her in terms of fees/assessments.
I see newer condos/apartments that are not very big but something like 1/2 of a relatively small floor space is taken up with a kitchen/bathroom while there is no room for bedrooms, living space, etc. Older homes would have had more space focused on the living areas and less on the kitchen and bathrooms.
On this point, I think I disagree. If modern tastes dictate that that we have bigger bathrooms and kitchens and these are accommodated by reducing the space for dining and living rooms because formal at home dining and entertaining occurs much less often, that's fine.
The problem is that builders aren't building smaller on smaller lots to cater too moderate incomes. They've calculated that all the profit is in the high end. For some reason, builders in the 1940s - 1960s thought they could make good money building for the middle of the market. They don't think that anymore.
One reason might be that they build a better product now. The plumbing, electrical, fire, seismic, and energy efficiency standards have all been dramatically tightened. The other thing is that in the past, supporting facilities were financed by the City's general fund. Nowadays, I believe most developers have to build them and then add the cost to the price tags of their homes.
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