Definition of “Starter Home”

[calidesigner]

calidesigner

yup, that sounds about right. Recently was driving with a coworker, who lives in the greater L.A. area, and he was going on about how he’s trying to help his oldest kid get into her first home, and of course I being a piggingtonian through and through, started going through the check list of exotic mortgages causing upcoming forclosures, unsustainable prices compared to fundamentals, etc. To which he responded, yeah but the PAPERS still show prices going up a little bit in greater LA from last year…..to which I responded with…silence. Yep, the sheeple haven’t yet woken up and smelled the coffee.

calidesigner

[Cow_tipping]

I dont quite interpret it that way, though the Idiots at large do.
I look at it like this. For example.
I have a wife and am thinking of a baby. Now we may have another baby in the future after the first and we probably should think of a steady location with a neighborhood with other kids a yard and a school that is good etc.
I also dont quite know the work involved in buying a house and my discipline in keeping money aside and sending off payments is still in its infancy.
I would like to get a simple house that can hold the whole family without us elbowing each other everytime someone turns around and at the same time let me get used to the idea of debt service and give me time to bone up on my discipline.
It cannot have major problems because I cannot fix it being a new owner, it cannot be un an undesirable area being wife and family man, it cannot break the bank because wife may be unable to work a few years while making babies, it cannot be etc etc … what ever.
Ideally a starter home has to be inexpensive, trouble free, fit your family and in a good neighborhood.
Ergo a new vinyl box in a good area for a good price that you can afford with 1 income and heck if you get laid off, you still need to be able to cover it for a few months – works good.
Cool.
Cow_tipping.

[BikeRider]

That’s just a starter home in your area. In other parts of the US, a starter home is a nice house, just smaller square feet. Years back, my first home was a brand new 1400 SF Cape Cod on one acre for $89K. Keep in mind that people in California are basically out of their minds (lost touch with reality). At least, that’s how it appears to the rest of us watching from afar. I just hope the people that screwed up your area never come our way.

[ibjames]

Exactly, a starter home here is jacked up, a starter home anywhere else is usually a nice place that is smaller. I have a buddy that bought a nice 3bd 2ba 1ga for 160k in the heart of milwaukee, a nice place.

For that price, I couldn’t even get a 1bd condo that was deserted and infested with rats

[no_such_reality]

Yeah, a starter home typical is a smaller 3bd 2ba place.

Whatever happened to the NAR proposal to redefine affordability to be based on just the median price of condos? Since in their rationale ‘condos represent the entry market’…

[Cow_tipping]

OK to put it in simpler words – yes 3/2/2 does qualify as a starter home. But I was going for the no frills (no granite in kitchen, marble in bathroom crap) and hence lower cost approach. In Charlotte NC if your house is under 2,000 sqft, its going to be very very hard to sell. OK 1 storeys under 1100 or 2 storeys under 2,000.
Cool.
Cow_tipping.

[(former)FormerSanDiegan]

Our starter home was a 3BR/1 Bath house in Clairemont. It was old and small but reasonably well-maintained. Not a complete $hithole. My family (all in the Midwest) thought I was crazy to drop $160K on what would have been a $45K property back there. The house was definitely much less than we wanted, only one bathroom, which sucks, about 1100 square feet and the washer/dryer were outside. But it was what we could afford … with two professional salaries in technical fields. We bought in 1996, probably at the high point of home affordability in the last 3 decades in the area. The old affordability index (based on 30-year fixed, 20% down) was something like 40-50% in San Diego at that time.
(I hope this doesn’t sound too much like the old man saying “back when I was your age …”)

So, my point is … Even at the best time to buy a house in San Diego in the last twenty years, a SFR starter home was much less than desirable for relatively high-income dinks (no kids at that time). I hope this provides some perspective and that people don’t expect to be able to waltz in at the coming bottom in housing and buy their 2400 s.f. energy efficient coastal view dream home as their first house. (But perhaps those who cashed out in 2004-2006 will

… maybe).

[ibjames]

I’m just looking to have a house.. 2 bedroom 1 bath with a garage and a tiny yard in a decent area. 3 bedrooms? Man.. I’d be living the high life

[bigmoneysalsa]

Honestly I kind of like the California Association of Realtors definition that they use for their (otherwise bogus) affordability index. It assumes that a starter home is 15 percent cheaper than the median-priced house. Sounds about right to me. Also has the nice feature of working in any market with any mixture of housing types. Why argue about neighboorhoods and square feet when we can let the invisible hand work it out.

[Cow_tipping]

15% … you kidding … 15% is nothing.
I’d have given it some shred of credibility at 33%.
You are going to have to consider these factors.
Starter homes are for people starting out on their own. More than likely, first real job (delivering pizza isn’t a real one) and maybe a new marriage which more than likely wiped them out, and more than likely spouse also working the same entry level job.
15% is thoroughly arbitrary and very very convenient for realta-hole’s to pimp it up.
Assume that house has to be carried on by 1 wage when the other one gets knocked up … and they have the baby. That is starter house.
This is one more of those affordability has become a concern … WTF … by saying affordability they have conveniently shifted the focus off the insanely high prices to other sheite like funky financing which has gone out, the higher wage paying jobs that have disappeared, and what not …
No sheite realt-hore, we get it. You want prices to stay high cos you make commission off that, and you want us to stretch to get into a house with suicide/homicide option arm and leg loan. OK we get it.
Cool.
Cow_tipping.

[bigmoneysalsa]

I’m confused. If the realtors used 33% instead of 15%, then their affordability index would go up (affordability is higher). Since you think their index is already too high (I agree, btw) then using 33% would make it even higher and more misleading.

15% may not be right on, but I think it was based on some sort of research. If they had just picked a number out of thin air they could have picked a larger number and made their numbers look better. In any case you have given no evidence or argument as to why it is wrong.

[Cow_tipping]

15% cheaper than the median priced house – that is what the realta$$holes want to call starter home.
I am saying that its waaaay too high … but I just realised your point.
You’re saying it should be 10% say, but that = median prices have to drop much more … not make the starter house cost more … I get it.
I wanted the starter house much much cheaper than median, you want starter house closer to median, but median cheaper still … I get it. You’re good …
Cool.
Srinath.

[bigmoneysalsa]

Ah, OK. I just got your point too. 15% off TODAY’S median price is indeed a total joke for where a starter home should be. Should be more like 60% off in my opinion.

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