What constitutes a "starter home"?

[Goldy]

My problem with starter homes is that they tend to appreciate slower and any money you might earn on them could be wiped out by a surprise furnace or roof repair. If you buy a step up from a starter and appreciate at the same % rate as the starter you can weather a few repairs a little better but you also pay more to sell it so maybe it's a wash.

[disneysteve]

In my opinion a starter home:
1. Has 2 or 3 bedrooms
2. Has 1 or 1.5 bathrooms
3. Has a 1 car garage, or no garage
4. Is pretty basic inside
5. Is in an area that is not highly sought after
6. Is roughly 2x the purchaser's yearly income (or equal if 2 parties)

You've just described our home except we have 2.5 bathrooms.

You also described my parents' home where I was raised.

We've been in our "starter" home for 22 years. My parents lived in their "starter" home for over 50 years.

[disneysteve]

Up through 1980, but no one makes those house anymore

This is absolutely part of the problem. New homes today are 2-3 times bigger than new homes a generation ago even though families are smaller. People are demanding more and more space and that comes with a higher price tag.

My problem with starter homes is that they tend to appreciate slower and any money you might earn on them could be wiped out by a surprise furnace or roof repair.

This is only an issue if you bought a house as an investment. Our primary home isn't an investment. It's a place to live. I don't care if it appreciates rapidly or slowly or not at all. We're not selling it no matter what happens to its value. We didn't buy it to earn money.

[Fishindude77]

In my neck of the woods you would have to hold a home for a long time to get much appreciation. Anything priced over about $3-400,000 has a pretty small pool of purchasers. You may lose money on one of these. 60 Miles away in some of the cities, it's a whole different ballgame.

[dawnwes]

I wish we had kept our starter home. We paid $142K for a 1600 sq. ft. house in the foothills in LA County in 1998. It needed work and we put in about $40K and made it livable. We didn't upgrade the kitchen and it needed updating, but we could have gotten to that. .

We could have had that thing paid off, we could have added on, and we could still be living in Los Angeles without debt.

The thing that scared me about that house was that because it was in the foothills we often found creatures in our yard. We saw bobcats, rattle snakes, coyotes, and once a mountain lion got in the yard. I had little kids at the time, well, an infant when we moved in and then 2 years later, another baby. It made me really nervous.

But I miss CA and honestly don't think we would want to move back due to finances. I know DH and I both would make more there, double probably for him and I know my salary would be double, but we would again be in a tiny house for $800K and both HAVE to work full time, etc....he isn't willing to do it and the kids don't want to leave here now.

That is WAY more than anyone here wanted to know, but I am really missing CA right now.

[Permanent Temp]

Our house was built in 1964, so 51 years. I think this is often part of the problem. People want new construction despite the fact that the older homes are probably far better built than the stuff they slap together today. I often wonder if some of the houses I see going up today will still be standing 100 years from now.

This is totally true. The home we just bought was our "starter home" It would retail for about 410-420K but we got it as a short sale for less which is great since we thought that was a really inflated price, it is the market but still. We live in the Rocky Mountain Area so settling is a huge concern. The home is from the 1960's. It has some copper plumbing and aluminum wiring but that seems to be in good shape since its not causing issues so far, also the circuit breaker is new. We did some repairs that the home needed which also brought it up to code. It's great to think those are things we won't have to worry about for a long time, and would insure we an sell it at a good price if it became necessary.

I didn't want anything built before 1980 so that I could be sure the thing would still be standing in a few years. We know people that bought new expensive homes and they are going up in a few months. I find that really frightening. They don't look very nice either honestly, you can tell the house was thrown up quickly. The plumbing in these new houses is so bad. I know that because we have a family member who does plumbing. Even the people who came to work on things at our home were going on and on about how great it is to have a house of this age because it was built properly.

We are closer to our 30s than 20s so we just wanted to get something we can grow into rather than having to scramble to get something bigger in this crazy market if we decided to expand our family. We had rented until this point and our monthly mortgage payment is about twice as much as our rent was but we are enjoying 4 times as much space (5 times as much if you count the finished basement) for this amount of money. We also have the benefit of a fenced in back yard, a private laundry room, and a two car garage.

Also our rent was discounted because we had been in the apartment for so long. If not we would have been paying over a thousand dollars a month to live in a tiny apartment.

We have a few debts that we have to address first but we already paying a few extra hundred dollars to the principal every month. We hope to increase that with time to keep the overall interest as low as possible.

[Joan.of.the.Arch]

The home is from the 1960's. It has some copper plumbing and aluminum wiring but that seems to be in good shape since its not causing issues so far....

This is the second time I've seen copper plumbing mentioned in a negative way on SA. Is there something wrong with copper? Or is it only with some of the solders that used to be used with copper? Are plastic pipes being touted as healthier now?

[disneysteve]

This is the second time I've seen copper plumbing mentioned in a negative way on SA. Is there something wrong with copper?

Nobody really knows the answer to that question. There is some speculation that copper that leaches into the water can raise your risk of Alzheimer's and some other medical problems. I've seen reports that about 98% of homes built in the last 45-50 years have copper pipes, so if they're dangerous, we're all in a lot of trouble. Reports also suggest that the lifespan of copper pipes is only 15-20 years, again a potentially significant problem if your house is 25 or 30 or 50 years old and the reports are true.

Our house is a bit over 50 years old. It has copper pipes. They still work just fine so I tend to doubt the 15-20 year lifespan estimates. We've live here for 22 years, and everywhere I lived before this also had copper pipes, so I've been drinking water from copper my whole life (I'm 51). Has that increased my risk of Alzheimer's? Who knows?

[Fishindude77]

Copper water lines are a much better product than the plastic crap commonly used now. You don't see much of it in homes anymore because it's more costly and takes a much more skilled plumber to install it. I replumbed my home with copper water lines.

[Nutria]

We live in the Rocky Mountain Area so settling is a huge concern.

Settling is a concern when you build on reclaimed land. Why is it a problem when you lay a foundation on granite?

[LivingAlmostLarge]

I'm in a starter home 3/2.5 bath and people are treating it like it's gold. I'm not sure why anyone would pay as much for this starter home as a newer bigger new construction, except they don't want to wait?

[Permanent Temp]

This is the second time I've seen copper plumbing mentioned in a negative way on SA. Is there something wrong with copper? Or is it only with some of the solders that used to be used with copper? Are plastic pipes being touted as healthier now?

Actually didn't mean to make that sound negative. The aluminum is the minus in that sentence. I don't care one way or another about the cooper it's fine. Just more expensive than PVC to replace.

[Permanent Temp]

Settling is a concern when you build on reclaimed land. Why is it a problem when you lay a foundation on granite?

No idea just know it can be a big problem here. We have evidence of settling in our house but nothing crazy like the the cracks on the pictures in this link.. Here's another article talking about issues caused by weather and another which people sued over it

[sv2007]

On the local morning news, there was a story about Philadelphia being named the 2nd most affordable city for 1st time home buyers. They then gave an example of a $275,000 "starter home".

Am I that out of touch with reality that a 275K home would be considered a starter home for many people? Using the 2.5x income guideline, that means you need to be earning 110K. Are there that many people making that kind of money at the beginning of their careers? Even at 3x income, that's almost 92K of income.

We bought our home in 1994 and it isn't worth 275K today 22 years later. I realize we bought very modestly and didn't spend 2.5 or 3x income but I still don't see 275K as being a starter home for most people just starting out unless people are earning a lot more than I realize.

One thing I think about whenever I think RE is that is is very regional and cyclical where demand and supply goes out of whack evey now and then (hence you have buyers market and sometimes seller's market). Right now, most think it is a seller's market in most places in the USA.

So, in such market (which I have no idea about Philly), it is not unusual (bsed on my observations) to have starter home prices out of the reach of "starter" families. In fact, a "starter" family may get defined as a family established with a new kid (so parents have worked 5 years in the industry). I.e. they will not be making your typical new grad incomes. (BTW, new grad pay has increased a lot in the pay 3 years.)

Beyond all that.

Somewhere I remember reading that the median household income is like $60k or something. Now I also remember hearing that most home owners earn way more than renters, then they must surely earn more than $60k, so $90k isn't out of the question.

But RE is very local. What's Philly's income level? rent? future outlook?

Here, a starter home is in the $1M range.