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Seattle Bubble Forum Archive • View topic - Riding up the housing escalator--are you on board?

Riding up the housing escalator--are you on board?

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Riding up the housing escalator--are you on board?

Postby redmondjp » Thu Oct 04, 2007 2:26 pm

Here's a comment from Ardell on this topic: http://www.raincityguide.com/2007/10/02 ... /#comments

30. ARDELL - October 4, 2007

The reason FHA is important here is if the lowest properties don't move, those people don't move up. It won't help first time buying in all price ranges. But if the low end doesn't move, the natural flow of move up is hindered. Theoretically the second and third legs of the move up have downpayments from the equity in what they are selling, and are not zero down buyers.

So making sure everyone is up to speed on moving the under $350,000 crowd, will help all market segments in turn.

[bold emphasis above, mine]
-------------------------------------------------------------------------------

The theory goes, one buys a 'starter' home, stays there 3-? years, and then over time as one's income increases and one's family grows, one trades up to larger and more expensive homes (2nd and 3rd legs, from Ardell's comments above), riding the housing elevator all the way up to equity heaven (whereas, all non-owners are on the down escalator on their way to either 1) the tool dept. at Sears, or 2) bitter renter zero-equity hell). I distinctly recall my realtor implying to me that I would only be in my current (starter) home for a few years before moving to a bigger, better home (didn't happen, and probably won't ever due to the price increases having wildly exceeded my income increases over the past 8 years).

In my neigborhood, a 'starter' house is between $400-500K, and the next step up is $650-850K (for a 20-year-old 3000 sq ft 4 br/3ba house). I guess that I should include condos here, but somebody with a family shopping for their 3br/2ba starter house with a 2-car garage most likely isn't going to find living in a condo workable.

So what do you think? Is this reality for most people (the 'natural flow', according to Ardell), or is it some sort of realtor utopia where they have constant income generated by everyone (especially their previous customers) buying and selling every few years. Note: I can see this model working where the cost of starter homes is well within the reach of those making the median income in their area.

Discuss. :)
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