Graduated Learning: Life after College

I got my degree, I got a job…now what?

We skipped past the starter home June 27, 2018

Filed under: Boston,Personal Finance,Uncategorized — Stephanie @ 9:53 pm
Tags: ,

2016 was a big year for us.  We had our first child!  And then later that year, we bought our first house!  We’d been “seriously” house hunting for about a year. At the beginning of our search, we had a vague idea of what we wanted: something closer to work, in a good school district, with a garage, a yard, and enough rooms for a growing family. As we went to more and more open houses, we got a better idea of what we wanted. A family room right off the kitchen so we could entertain guests or have kids play nearby while we were in the kitchen. We also wanted a big enough kitchen to host my famous fondue parties 🙂 After an inspection of one house we almost bought that showed high levels of lead all over the place, we realized we also were only going to look at houses built in or after 1978 to avoid any lead paint issues.

Of course cost was a big factor as well. We were originally pre-qualified for a mortgage WAY more than we ever wanted to spend, just based on credit scores, income, etc. So we pared down choices to a more comfortable price range far below that amount. We had to keep in mind that our monthly payments would include the actual mortgage payment as well as money for escrow to cover property taxes and homeowners insurance.

We did consider first buying a “starter home” or a “fixer upper” but realized a few things: we are not super handy, and aren’t good at picturing a hypothetical home based on the current condition of a “fixer upper”. Plus we were already expecting our baby when we started seriously looking for a house, so trying to deal with renovations while pregnant/with a newborn was not something we wanted to do.  And most of the fixer uppers were still quite expensive as-is!  Also, we knew that if we went with a small home to start, we’d probably want to or need to move to a bigger house within a few years. And so a few factors related to buying a new house a few years down the line became clear:

1. The housing market in the Greater Boston Area is so hot that it’s hard to buy a house if you have any sort of contingencies. That could include getting a mortgage, wanting an inspection, or having to sell a house first. We were still renting, and so we were in a much better position than anyone else who might have to sell their house first. So the next time we’d buy a house would be while also already owning a house, which would make us less desirable to sellers.

2. Costs associated with selling/buying/moving are not negligible. And with every move, you inevitably have more stuff you’ll need to move, so it’s more expensive. Closing costs when we bought this house ended up being significant, so trying to sell a house only a few years later means you might lose money even if you sold it for more than you bought it for.

3.  Even with the recent boom in house prices, we had no guarantee that our house would go up in value enough that we’d make money on the sale.  And keeping in mind point #2, it’s possible we’d lose money on the whole deal.  Regardless of if you think a house is an investment or not, this would make a starter home for us a risky short-term investment.

So, we bought this house.  We like it a lot!  We plan on sticking around in this house for a while.  Sure, there are some small fixes our home inspector found that we’ve been working on, and we have plans this summer to upgrade our heat/hot water system (they’re at the end of their useful lives) and add a generator (after dealing with multiple power outages since we’ve moved in, due to various rain/wind/snow storms).  But we don’t have plans to do any major renovations any time soon.

I would have loved to have started with a smaller, cheaper house, but our needs and the housing market meant it didn’t make emotional or financial sense.

How did you decide if/when/what to buy? Or are you still renting (out of choice or necessity)?

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9 Responses to “We skipped past the starter home”

  1. We bought in 2008, and because prices were dropping during our long search period–and because the as-is short sale was in really good condition–we wound up with a less bad commute and a better house than we expected. It’s small, but it works, and we didn’t want a big house anyhow. I’m very glad we were able to buy when we did, because we wouldn’t be able to afford it now.

    Liked by 1 person

    • Stephanie Says:

      Even with our bigger house, I’m glad we bought when we did! Prices have continued to go up in the almost 2 years since we bought the house. According to zillow, our house is worth $100k more than what we paid for it!

      Like

  2. SP Says:

    We bought what some might consider a starter home, but with the intention/hope to make it work for a very long time / forever. It has 3 BR / 2 BA, so it may get tight – but there are enough bedrooms even if we have 2 kids. It’s just too expensive here for us to spend more, although we could have compromised and went to a further-out area with longer commutes. The main drawback is the not-great yard – but if we wanted to spend $$$ we could make it into something a bit better.

    Liked by 1 person

    • eemusings Says:

      Ours would definitely fall in the general category of starter home but I say (fairly seriously) that I will die here!

      The rooms are small but we do have 3 bedrooms which is the main futureproof thing. Also a reasonable bit of land (yard/garden) and our own (not shared) driveway! Also a plus is the stone style cladding which is lower maintenance than, say, weatherboard walls.

      Main downsides: on a somewhat busy road, not the most amazing area or schools and it is older (but that’s better than post 2000s given the leaky house era here)

      Would I like a better area/a garage/maybe larger bedrooms – sure. Am I going to find them in my price range ever? Doubtful. Do I want to go through the hassle of selling, buying and MOVING? *cries at the thought* See first sentence above!

      Liked by 1 person

  3. We bought our first house this past fall. It’s probably not our “forever home,” but it was at the perfect price point for us, it was a flip and very renovated (we don’t need to do any work, not even painting the walls), and we plan to live here for 5-10 years. We will probably move once our family grows by a few members because our house can accommodate growth but it will be cramped if we decide to have multiple kids, and we aren’t in a great school district (though it’s not that bad either). I’m hoping when we upgrade we can keep this home and use it as a rental. I love our house right now though!!

    Liked by 1 person

  4. Old Windways Says:

    There are definitely times when I think, why are we paying for all this space we rarely use (can’t remember the last time we sat down at the dining room table, and since we spend so much time in the family room, we rarely use the living room). Then again, it’s nice to have space when we want it (like when my whole family stayed with us for Thanksgiving, totaling six adults 1 toddler, and 2 dogs for several days).

    Some things in life you want to start out small and build up to, but I figure I made the right call skipping the starter wife and the starter home 🙂

    Like

  5. morjoysol2615 Says:

    The hubby and I are starting to think about home ownership. We’re renting right now (we didn’t want to buy in CA because a) it’s expensive and b) it’d limit where I could get my master’s), but we’ve decided that after our schooling is complete, we’re gonna settle down in TX (or OK) near my mom. I really liked your perspective on skipping a starter home and the reasons you did so. 😀

    Liked by 1 person

  6. I have been renting for 20 years, and I still can’t bring myself to buy. I love the idea of a space of my own and having a big living room in which to entertain, but I also like not being responsible for anything. And I’m afraid of everything, so the idea of tying up that much money in a single asset scares the bejesus out of me.

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  7. Congrats. It’s no small feat to buy a first home, but as you point out the Boston area is particularly difficult.

    I like the idea of buying a good home once and just sticking with it (unless it really isn’t acceptable for a changing lifestyle). I don’t want to live up to my Lazy name, but it seems like selling a home is a lot of work (plus the closing costs as you mentioned.)

    Like


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