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House hunting today and 30 years ago
Old 12-26-2018, 06:34 AM   #1
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House hunting today and 30 years ago

DD is house hunting with the long term BF (yeah there will be a wedding) . They both are doing well financially but are facing a ‘sellers market’. Last week I was asked to look at a house she liked close to Philly. It was a mid century modern (A.K.A modest, 1960s house) new windows, doors, kitchen , baths. Some walls taken down to make the kitchen, dining/living rooms and open and airy. The bedroom smallish but adequate. The garage was small and untidy and to this old mans eye the older roof had some sags. $368,000. Taxes $8,600.

30 year Mortgage monthly payment on $220,000. (They’ve diligently saved).
4% = $1,050
5% = $1,181
6% = $1,319
So if we take the middle payment $1,181 + $717 taxes +$125 insurance it adds up to a respectable $2,023. Before gas, electric and cable. On Long Island that house would easily fetch $500,000. Insanity.

Repairs don’t scare me -The first house the Mrs and I bought was functional but needed everything.. I mean everything. Doors, windows, roof, boiler, kitchen, bath -oh and the second floor was unfinished. With time, patience and money almost anything can be made nice.

In the end our newbie buyers misunderstood what school district they were in.. it was a deal breaker.

I worked in NYC for roughly 20 years. Our modest cape cod home was a 50 minute LIRR ride to penn station. Add 20 minutes for a subway ride. I am not a city person, I detest the rat race.

DD is a programmer and the BF is an accountant. Knowing what I know now i think I’d take a different route. Find a small town like Lewisburg West Virginia buy a home for $250K, pay a couple grand in taxes and build an online business. No commute, comfy clothes, good food, no car, train or bus expenses. Rat race be dammed.
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Old 12-26-2018, 07:03 AM   #2
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I worked for many years for a Pennsylvania company and dreaded that phone call (always on a Friday) saying they wanted me to transfer to Home Office. I too have looked at real estate in the area west of Philly, but that was 15 years ago.
I would have had to hated to have spent the money to move there because the two 4000 square foot homes we'd lived in prior provided us with a quality of life we simply couldn't afford in PA.
And the starter homes of today @ $368K makes me proud to have chosen living in an ultra COL place versus chasing the corporate ladder. My plan ultimately was ER, and I could have never made it starting my adult life in NJ, PA or NYC. And I didn't suffer living in Memphis, Nashville & Atlanta suburbs.
Good luck to your young couple.
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Old 12-26-2018, 07:04 AM   #3
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Remember that you aren't them, and they aren't you. What they want is different than what you want with your older eyes.

I'm guessing your parents thought the same thing about you when you purchased your first home.
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Old 12-26-2018, 07:23 AM   #4
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Originally Posted by joeea View Post
I'm guessing your parents thought the same thing about you when you purchased your first home.
Yep. For both the houses I have bought, I was always mostly concerned about the lot and location; as long as the house was livable I didn't much care about the details. Of course, if in either case there had been a (future) wife along for the ride I may have been forced to sing a different tune. Happy wife, happy life.
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House hunting today and 30 years ago
Old 12-26-2018, 07:31 AM   #5
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House hunting today and 30 years ago

Quote:
Originally Posted by joeea View Post
Remember that you aren't them, and they aren't you. What they want is different than what you want with your older eyes.

I'm guessing your parents thought the same thing about you when you purchased your first home.

You are of course right about my idea vs their idea... I’ve kept my thoughts to myself.

Both Mom and Dad grew up impoverished in tiny homes with too many brother and sisters. To them an average suburban home was a castle.
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Old 12-26-2018, 08:17 AM   #6
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Part of it is also buying a house that is re-sellable. Most people realize these days that your job isnt' guaranteed for 40 years (unlike the previous generations), and thus the likelihood of staying in the same house 40 years is also impacted. The average homeowner only owns their home 7 years. That doesn't provide a ton of time for long term sweat equity projects. Some minor updates to make it look "fresh" yes, but not the type of projects you may have done to your home,

As for the $2k payments, yeh that sounds about right.. it's hard these days to not have a payment that big unless you are buying a condo or 1000 sq ft townhome. Property taxes are often heavily weighted to new purchase homeowners so you take on more of the tax burden. On the plus side interest rates are still very low, but that is offset by the sky high home prices.
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Old 12-26-2018, 12:56 PM   #7
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Quote:
Originally Posted by rayinpenn View Post
DD is house hunting with the long term BF (yeah there will be a wedding) . They both are doing well financially but are facing a ‘sellers market’. Last week I was asked to look at a house she liked close to Philly. It was a mid century modern (A.K.A modest, 1960s house) new windows, doors, kitchen , baths. Some walls taken down to make the kitchen, dining/living rooms and open and airy. The bedroom smallish but adequate. The garage was small and untidy and to this old mans eye the older roof had some sags. $368,000. Taxes $8,600.

30 year Mortgage monthly payment on $220,000. (They’ve diligently saved).
4% = $1,050
5% = $1,181
6% = $1,319
So if we take the middle payment $1,181 + $717 taxes +$125 insurance it adds up to a respectable $2,023. Before gas, electric and cable. On Long Island that house would easily fetch $500,000. Insanity.

Repairs don’t scare me -The first house the Mrs and I bought was functional but needed everything.. I mean everything. Doors, windows, roof, boiler, kitchen, bath -oh and the second floor was unfinished. With time, patience and money almost anything can be made nice.

In the end our newbie buyers misunderstood what school district they were in.. it was a deal breaker.

I worked in NYC for roughly 20 years. Our modest cape cod home was a 50 minute LIRR ride to penn station. Add 20 minutes for a subway ride. I am not a city person, I detest the rat race.

DD is a programmer and the BF is an accountant. Knowing what I know now i think I’d take a different route. Find a small town like Lewisburg West Virginia buy a home for $250K, pay a couple grand in taxes and build an online business. No commute, comfy clothes, good food, no car, train or bus expenses. Rat race be dammed.
You should look into house hunting in Florida. Bought my newly constructed home 3bed/2bath 1500 sq ft in early 1990’s Mid 90k. Property taxes 1,700k annually. Today my home is worth 250k without any renovations, property tax 1,200k annually. Go figure. Living in the vacation capital of the world and with no state income tax. Gotta love it. Just deal with the annual hurricanes and the frequent gator sightings and gun friendly stand your ground state, then all is good.
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Old 12-26-2018, 01:06 PM   #8
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I don’t claim to know about where they are looking, but many sellers markets have or are now turning into buyers markets, so they may be rewarded of they’re a little patient? The general trend is away from buyers at the moment, even in some of the hottest areas of the last 5-8 years. But many realtors are doing all they can to keep buyers thinking it’s still a sellers market. FWIW
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Old 12-26-2018, 06:16 PM   #9
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Buy a small house in a good area. This advice has served us well over the years.
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Old 12-26-2018, 06:22 PM   #10
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+1 Buy a small house in a good area. This advice has served us well over the years.
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