As if I could kick off this year’s blog series with any other title.
Last Fall, trying to pick a theme for this year’s blog, I ended up doing some crowd-sourcing. My friend, Sean Carpenter, suggested Tom Petty songs. As Realtors, who -presumably- write blogs about real estate, this makes perfect sense.
Direct relevance aside, I loved the idea and, coincidentally, I’d already named our upcoming summer vacation, “IGWO 2020.” The line, “Into the great wide open,” seemed the perfect way to describe our plans for a roadtrip out west. It was all coming together…
Jumping back to the present, there is a real-estate-related point here and that is this lyric from the aforementioned song:
“They moved into a place they both could afford”
Notice, those two crazy kids, just starting out, did not “mortgage themselves to the hilt,” or “ask his parents for an advance on his inheritance,” or even, “decide to keep looking, in case something opens up.” No. They figured out what worked for them and they started their lives.
I think this is a key piece of the affordable housing puzzle.
Once upon a time, people who were just starting out would scrimp and save to buy a little place to call their own. Be it ever so humble, it was theirs. They’d live in it, make repairs, make memories and, when they sold it, make a profit. They’d roll that profit into a downpayment on a “move up” property, offer best wishes to the new owners of their Starter Home and the cycle would repeat.
Over the last few decades, buyers seem to have lost their grasp on the concept of a Starter Home. They’re preoccupied with comparison and keeping up with the Joneses. They stretch themselves thin, buying as much as the bank will allow them to borrow and they don’t have equity from that Starter Home to help them ease into their next investment.
Instead, many of those Starter Homes are overlooked or not even considered and end up being bought by investors. Years worth of homeowner updates and maintenance happen in a few weeks and the property is introduced back to the market… except it’s no longer a Starter Home and it’s no longer affordable.
Now, there’s a difference between a Starter Home and a tear-down; I’m not suggesting that anyone live in a condemned building. However, it might be ok to move into a property that needs new carpet, or has original cabinets, or has some rooms that the new owners would need to paint themselves, after closing. It might very well be in an older neighborhood, but it’s affordable.
If we can help these new buyers keep their future plans in sight and balance what they want now with what they want most, we may find a better housing cycle developing.
That Starter Home may be the equity machine that propels them into the neighborhood with the bigger homes and the school they want, a few years down the road. Maybe it remains a solid investment and wealth-building opportunity and those savvy owners decide to rent it out, once they move.
In our conversations with friends and family who are just starting out -and agents, in our counsel to clients- let’s bring things back into perspective. Show them they’re working toward stability, along with those white picket fence dreams and that this investment can be a Starter Home, not their last stop. Welcome to 2020; the future’s wide open.