Starter house vs lifetime house

sunrainmooncl

sunrainmooncl wrote: »

What is everyone's thoughts and plans with regards to buying a starter house that you will eventually grow out of vs buying a house that you can grow into?

For those who already own property. What did you do and what are your experiences?..............

Bougfht a 2 bed flat in 2005, location didn't suit me for guts of a decade so rented it out. BAck in it now, grand job.

I haven't grown out of it as I don't have kids and live alone. Neighbours have two daughters and they seem to manage fine in the 2 bed flat

I'm "lucky" in so far as I'm out of -ive equity and earning over twice what I earned in 2005 so should I need to move I could. A 3 bed house could be gotten for €100k more than my flat is worth currently in the same town (20 ish miles from Dublin City Centre)

Samuel T. Cogley

Samuel T. Cogley wrote: »

......... 2000+ sqft homes as the norm. Why on earth would someone saddle themselves with cleaning and heating that let alone the cost of building it in the first place. .................

Status symbol for muck savages who don't have much cash anyway.

keane2097

Augeo wrote: »

Status symbol for muck savages who don't have much cash anyway.

That's not very nice.

keane2097

keane2097 wrote: »

That's not very nice.

Apologies, it was slightly tongue in cheek but there's a large element of truth there imo.

Lumen

Augeo wrote: »

Apologies, it was slightly tongue in cheek but there's a large element of truth there imo.

Yeah, but since muck savages with lots of cash (e.g. MOL) also have big houses, the big house doesn't specifically identify the cash poor desperately aspirational mucksavage of your stereotype.

The simpler explanation is that people enjoy larger houses. I really don't see the problem.

Klonker

Comparing cities and the country makes no sense. In the country it probably makes sense to build a 2000 sq ft house straight off because you will more than likely live there for the rest of your life , you probably have the space on the site you bought/were gifted and the cost wouldn't be a significant amount more than building a 1000 sq ft house.

In Dublin it's a complete different story, the cost between a 1000 and 2000 sq ft house in the same area would be massive and you are more likely to move in future.

Lumen

Gardens are more of a money pit than big houses. An acre of proper garden needs a full time gardener, at a cost of perhaps 40k a year.

Totally dwarfs maintenance cost of a few extra gutters, windows, render and heating bills from a bigger house.

That's the reason most country McMansions have nothing more than a tarmac moat, a fancy front gate and a load of grass.

Lumen

Lumen wrote: »

Yeah, but since muck savages with lots of cash (e.g. MOL) also have big houses, the big house doesn't specifically identify the cash poor desperately aspirational mucksavage of your stereotype.

The simpler explanation is that people enjoy larger houses. I really don't see the problem.

Lumen wrote: »

Gardens are more of a money pit than big houses. An acre of proper garden needs a full time gardener, at a cost of perhaps 40k a year.

Totally dwarfs maintenance cost of a few extra gutters, windows, render and heating bills from a bigger house.

That's the reason most country McMansions have nothing more than a tarmac moat, a fancy front gate and a load of grass.

I bet MOL has a nice proper garden and not just a load of grass for the little muck savages to run about on :pac:

Samuel T. Cogley

Anyways - done to death at this stage and even the people saying it's small I think concede in a city it's more average. The only thing I'll add is there is an unrealistic expectation of house size in Dublin among some. A 1500sqft home in a desirable area of Dublin rightly costs upwards of 500K.

Sorry if I missed it but did the OP specify a location, because that does make a difference in fairness. I'd be less likely to recommend moving where the difference between the first place and the forever home is less than 100K purely on moving and legal costs.

PhoenixParker

I think the idea of a starter home has validity but the purchase still needs to be approached with as much care as choosing a forever home.

A general observation from anecdotes I've read is that you can compromise on the size of the property or the location of the property but you absolutely should not compromise on both. Seems to me it's the people who compromised on both who really ended up screwed in the recession.

Personally I would always compromise on size before location. As others have observed a small space can be made liveable if you're clever. A miserable commute is always a miserable commute though.

Lumen

PhoenixParker wrote: »

A miserable commute is always a miserable commute though.

This is true, except people do tend to be incredibly unimaginative when it comes to transport options.

When I first moved to outer Dublin I spent four years stuck on a commuter train for an hour each way door-to-door, often nose-to-armpit with coughing, sneezing strangers. Then I started cycling and cut the commute to 35 mins each way. Did that for 8 years.

We were looking to trade up to outer south Dublin since 2012, but I was too slow to make a decision as prices skyrocketed for the next three years or so. We still had the budget to (just about) get a nice house with a small garden in D6, or a larger house with a larger garden in D16/D18, but eventually we ended up in north Wicklow in a location I had totally written off as uncommutable, but I just bought a motorbike and now it takes me 35 minutes to get to Dublin city centre.

If someone had suggested either cycling or motorcyling to me 15 years ago I would have totally written off both options as inconvenient and insanely dangerous respectively, but in the end both were much more fun and free than sitting on a train, and now I get to enjoy both the city buzz during the day and the space and peace of the countryside at evenings and weekends.

This isn't intended as any kind of recipe for happiness, I'm just suggesting that with a bit of flexibility you can make "undesirable" locations work, in the same way that you can make a tiny house work.

Samuel T. Cogley

Lumen wrote: »

This isn't intended as any kind of recipe for happiness, I'm just suggesting that with a bit of flexibility you can make "undesirable" locations work, in the same way that you can make a tiny house work.

About 1250sqft? :pac:

traveller0101

I'd rather a smaller house now in a better location with the view to selling it further on. Nobody knows what the future holds so be smart, don't stretch yourself too thin for the first house and then you will hopefully be in an okay position when/if you need to move.

The_Conductor

traveller0101 wrote: »

I'd rather a smaller house now in a better location with the view to selling it further on. Nobody knows what the future holds so be smart, don't stretch yourself too thin for the first house and then you will hopefully be in an okay position when/if you need to move.

If you see yourself needing to move- I just don't see why you should buy at all- keep saving- and ultimately- buy where you are happy to remain..........

This whole 'I have to get on the property ladder' lark- is nuts.
If you can't see yourself remaining in a property long term- you shouldn't buy it- plain and simple.

PokeHerKing

The_Conductor wrote:

This whole 'I have to get on the property ladder' lark- is nuts. If you can't see yourself remaining in a property long term- you shouldn't buy it- plain and simple.

It's kind of like saying why buy a micra as your first car, when you can keep saving for the BMW.

Rent/Security/potential future revenue are all solid reasons to buy a house even if you feel you'd move on after 5-10 years.

But that doesn't mean I'd advocate buying a 1 bed in the back ar$e of nowhere.

I bought a house in Tallaght in 2014. Hand on heart it wasn't the dream home but if push came to shove it'll do us for life.

But I still plan/dream to live in the type of home I grew up in. I just haven't acquired the type of wealth my parents have yet.

My parents bought twice, second home was the forever home.

I think the boom/bust has skewed people's views slightly. Buying a home you can afford now with a view to one day hopefully buying a better home as your finances hopefully improve is still a completely logical/reasonable thing to do.

pwurple

I think the concept of buying the house you need NOW, rather than the one you think you may need eventually is valid.

I bought an apt when I was single, we bought a small 3 bed house near work when we were married. We bought a larger house much nearer schools when we had children, and we have set it up so that it is wheelchair / pensioner accessible for our old age.

Our circumstances changed as we got older, we progressed in our careers and we had more spending power.

I'm glad we bought within our needs at the time rather than overextending on what-ifs. We were pre-approved for 400k or something at the time (I actually kept some of those letters), but we bought a place for 175. Plenty of my friends got themselves into awful messes buying something they didn't need at the time, where we paid down a small manageable mortgage and had better equity, and a better idea of what we needed in a house when the time came to move.

Cuddlesworth

PokeHerKing wrote: »

It's kind of like saying why buy a micra as your first car, when you can keep saving for the BMW.
Rent/Security/potential future revenue are all solid reasons to buy a house even if you feel you'd move on after 5-10 years.
But that doesn't mean I'd advocate buying a 1 bed in the back ar$e of nowhere.
I bought a house in Tallaght in 2014. Hand on heart it wasn't the dream home but if push came to shove it'll do us for life.
But I still plan/dream to live in the type of home I grew up in. I just haven't acquired the type of wealth my parents have yet.
My parents bought twice, second home was the forever home.
I think the boom/bust has skewed people's views slightly. Buying a home you can afford now with a view to one day hopefully buying a better home as your finances hopefully improve is still a completely logical/reasonable thing to do.

It doesn't hurt to be aware that your parents probably bought the first house at well under 3.5 times single income. And that house probably shot up in price so much, combined with a low mortgage on the original property, that moving to a forever home was considerably easier for them then it ever will be for you.

keane2097

We do seem to have swung the other way on this thread to an almost blanket sentiment that the idea of a property ladder is a scam.

It is when you're being tricked into buying a three-bed semi-d a two hour commute from work, but there seem to be a lot of cases (certainly outside Dublin) where buying now to sell later seems to work out financially even under fairly pessimistic assumptions.

Ronan Lyons has a calculator here that is a good jumping off point for thinking about this.

Hollister11

I'd rather buy a one bed and pay 700/800 a month on a mortgage, then pay even a grand a month on rent.

Even If the rent was less, than the mortgage, I would rather own a bit more of my property each month.

The_Conductor

The_Conductor wrote: »

If you see yourself needing to move- I just don't see why you should buy at all- keep saving- and ultimately- buy where you are happy to remain..........

This whole 'I have to get on the property ladder' lark- is nuts.
If you can't see yourself remaining in a property long term- you shouldn't buy it- plain and simple.

If you are going to move in 6 months or a year it makes no sense but even for 3 years I think it's better to buy and be paying your own mortgage, have your own place you can do as you want with, no worries about being a tenant etc etc especially as your mortgage is likely to be less or even far less than the equivalent rent thus allowing your to save more for your next house than you could if renting.

It's also much more straight forward to rent out a room if you are the owner which again can be very lucrative.

You also have the option of keeping it on as an investment property and renting it out rather than selling it if it's a thing you were interested in getting into.

TheChizler

Hollister11 wrote: »

I'd rather buy a one bed and pay 700/800 a month on a mortgage, then pay even a grand a month on rent.

Even If the rent was less, than the mortgage, I would rather own a bit more of my property each month.

I think this is key. While rents are at or above mortgage repayment rates you're just paying towards someone else's asset and they may even be making income immediately as well. What other kind of investment has that kind of return? In that case you're paying a huge amount extra just for the flexibility of being able to move easily, or put it another way the lack of security.

I'd feel comfortable renting long term if the cost was significantly below the equivalent mortgage repayment. For small landlords they're still getting a decent return on investment if it's looked at more like a retirement fund they're contributing towards, and for the tenant they don't feel like they've nothing to show after all the years as they have a better ability to save.

In my case I'm not comfortable paying over what I feel is a sensible rate for rent (and my landlord is incredibly decent compared to current market rents) and would be happier paying towards an asset I get to own (and would be comfortable living in medium term), and have some left over for personal savings.

Alf Veedersane

Camdyn Incalculable Yogurt wrote: »

If you are going to move in 6 months or a year it makes no sense but even for 3 years I think it's better to buy and be paying your own mortgage, have your own place you can do as you want with, no worries about being a tenant etc etc especially as your mortgage is likely to be less or even far less than the equivalent rent thus allowing your to save more for your next house than you could if renting.

It's also much more straight forward to rent out a room if you are the owner which again can be very lucrative.

You also have the option of keeping it on as an investment property and renting it out rather than selling it if it's a thing you were interested in getting into.

I know of a couple that did that. Planned to move from a 2-bed within 3 years. Then he lost his job in a multi-national around about the time they found out she was pregnant with her second. The value of the home had dropped and they weren't in a position to upgrade. Even without the lost job, upgrading was going to be very difficult as house prices had risen and the value of what they were looking for had risen by more than the value of what they were in.

Depending on your circumstances, 3 years might be too short-sighted. It might not be but just making the point that it's not necessarily as straightforward as you painted it.

PokeHerKing

Cuddlesworth wrote:

It doesn't hurt to be aware that your parents probably bought the first house at well under 3.5 times single income. And that house probably shot up in price so much, combined with a low mortgage on the original property, that moving to a forever home was considerably easier for them then it ever will be for you.

I don't view anything my parents did as being easier or harder to do than what I'll have to do to be honest.

Circumstances are obviously different due to the near 40 year age gap but the premise is still the same.

blindside88

I'm all for the idea of "starter home" if it's of a size that you could reasonably stay in for 10 years if your circumstances changed. We bought a starter home approx 3 years ago. In reality it's a home I could stay in forever but if I have 2 or 3 kids I'd like something bigger. It's a 3 bed semi d just over 1100sft, 3 bed 2 bath. If we have a couple of kids I'll either consider building on a second sitting room and downstairs toilet or ideally move to something bigger. We're in the lucky position that it's currently worth approx €40k more than we paid for it and have a site with planning permission (which I don't think we'll ever build on). I would have liked to buy bigger the first time but didn't like the idea of a higher mortgage payment. At present our mortgage is €300 less than rent on the same house. Ideally in 10 years myself and my wife will be on higher incomes and will have some equity built up in our current house. I see a house like any investment (although it's not strictly an investment) and I firmly believe that time in the market beats timing the market every time as none of us can predict the future. Op I'd say if you're happy to keep the property for 5-10 years go for a property that suits you for that time period

The_Conductor

Just to reiterate- the very first tranche of information the CSO released as part of its digestion of the census information- related to housing. Over 700,000 Irish people are living in accommodation that is classified as over-crowded, according to local authority guidelines. A slight majority of these people are owner occupiers. Over 80% of those enumerated are under the age of 15.

I.e. people bought into the 'starter home' argument- and for whatever reason (most probably lack of supply and/or changes in circumstances)- failed to make the transition to a 'forever home' (god, I hate those terms), when their accommodation was no longer suitable for their needs.

I.e. we have 700,000+ people, the majority of whom are qualified minors, living in over-crowded conditions, a small majority of whom are owner occupiers.

The whole concept of a 'starter home' relies on the premise of a person being able to upsize to a more appropriate dwelling if/when their circumstances change.

At the moment- this premise doesn't hold- because, quite simply- over 90% of our construction is of small 'starter homes' and only a very small volume (less than 1,800 units last year) of units over 1,150 square feet.

Wholly aside from any reason- how can you call it a starter home- and a forever home- when we're building one, but not the other?

LirW

At the moment- this premise doesn't hold- because, quite simply- over 90% of our construction is of small 'starter homes' and only a very small volume (less than 1,800 units last year) of units over 1,150 square feet.

Maybe that has to do with the needs of younger people in urban areas. A significant number of people between 20 - 40 choose against having children, at the same time they as well want to own a house. These people have different needs and requirements for their houses. Living alone or even with a partner on 1150 sqft or more is huge. It would be an amount of upkeep that I wouldn't like to have on my own.

And I think we don't need to discuss the fact that there is a huge shortage in affordable homes suitable for a family of 4 or 5 in urban areas, especially for people on lower incomes.

Something that stood out for me when I viewed a few show homes in Dublin suburbs: Houses with a size of around 120m2> (I'm so sorry, I really can't do square footage) had very odd layouts with bigger rooms but you only could use them as very conservative bedrooms with bed in the middle, while smaller units had a better layout. It really depends a lot on layout, huge space means little when the rooms are in an odd shape.

In regards of starter homes and trading up a few years down the line: The market is very volatile. There are so many micro markets and this is certainly not a good thing. We see people bashing their heads in for 2-bedroom apartments near the city centre while in other areas family homes move very slowly.
Yes, it makes sense to buy an asset because rents are high and the mortgage is less. But this can turn on you if the gaff loses value, you can't save up enough to move on again, or your starter home is in a micro market that makes it hard to break out of. It needs to be considered so carefully, because you're handing hundreds of thousands of euro over and this is a huge commitment, it's debt after all.

traveller0101

The_Conductor wrote: »

If you see yourself needing to move- I just don't see why you should buy at all- keep saving- and ultimately- buy where you are happy to remain..........

This whole 'I have to get on the property ladder' lark- is nuts.
If you can't see yourself remaining in a property long term- you shouldn't buy it- plain and simple.

So you think it makes sense to take your full mortgage offer (lets say 400k) and then add savings (lets say 120k) to buy a 3-bed semi (~1000sqf) for 520k where the repayments are going to be above 1500 a month. What happens if the interest rate goes up?

The_Conductor

traveller0101 wrote: »

So you think it makes sense to take your full mortgage offer (lets say 400k) and then add savings (lets say 120k) to buy a 3-bed semi (~1000sqf) for 520k where the repayments are going to be above 1500 a month. What happens if the interest rate goes up?

Obviously- you should be stress testing your repayment capacity- and that, along with your income multiple limitations, should insulate you from undue hardship when (and its definitely a 'when' rather than an 'if') interest rates rise.

By the way- 520k for a 3 bed-semi- is a bit of a nutty price- I accept its location dependent- but its a remarkable price for a semi-d...........

traveller0101

The_Conductor wrote: »

Obviously- you should be stress testing your repayment capacity- and that, along with your income multiple limitations, should insulate you from undue hardship when (and its definitely a 'when' rather than an 'if') interest rates rise.

By the way- 520k for a 3 bed-semi- is a bit of a nutty price- I accept its location dependent- but its a remarkable price for a semi-d...........

Agreed, I just made up the numbers but here's a few examples of what is going in desirable places in Dublin:

http://www.daft.ie/dublin/houses-for-sale/portobello/16-mcmahon-street-portobello-dublin-1490042/

http://www.daft.ie/dublin/houses-for-sale/ranelagh/athlumney-villas-ranelagh-dublin-1477062/

http://www.daft.ie/dublin/houses-for-sale/milltown/49-glenmalure-square-milltown-dublin-1432453/

But those prices wouldn't meet a couples repayment stress testing even if they were both on a decent salary. (My idea of a decent salary...)

The only way to live in those areas and be financially sound and to continue to save is to buy smaller. Without another downturn, the value will stay consistent or go up so you can trade up eventually.

Alkers

We're 6 months moved into our first house. The approach we took was, while it wasn't going to be either of our dream houses, we needed to buy somewhere that could cater for us (both 30) for the next 20 years if needs be. This meant we were looking in slightly less desirable areas at slightly bigger houses than being stuck in five years trying to raise two kids in a two bedroom townhouse.

As it worked out we've now got our two spare rooms rented out to friends of ours under the rent a room scheme which covers 75% of the mortgage repayments while still being mates rates.