With home mortgage rates hovering at or close to 8%, more and more buyers are finding it harder and harder to either qualify for a mortgage payment or find a livable property in their price range. I recently began working with a couple, first time buyers who could qualify for a home @$500,000. They didn’t have too big of a wish list: good sized yard for their two big dogs, three bedrooms, two baths, and a mother-in-law apartment downstairs with a separate entrance. And, most important, they want to live close to the University of Utah. A home, not a condo was the request, as buying a condo in that price range would most likely have an additional HOA fee of $300 or so per month for that Association’s water/sewer, exterior maintenance, insurance and any amenities like a pool, tennis courts, gym, etc. Guess what?
Nada. BIG FAT NADA.
One of our immediate issues was that one of the two was quite tall. Older homes often do not have very large bedrooms and so a bed that might fit the two of them would take up most of a main bedroom and leave little or no space for side tables or chest(s) of drawers. Plus, often living space in the basement would generally be very cramped for a tall person as ceiling height is often low and thus I had to educate them about this important factoid and then take them to homes built in the 1950’s and later to show them the difference. We found that anything close to the U, say within 20 blocks or so was in pretty crappy condition. My clients admitted they have no skills in rehabilitating a property and after learning that I took them to Rose Park where we saw a number of ‘flips’ /homes that have been remodeled in their price range. We saw some cute ones but there were no homes with separate entrances to have a downstairs apartment. They want this so they can have an income stream/renters to help with the mortgage payment.
The reality is that homes with a secondary apartment are about as hot as the hinges on the gates of hell because so many people now NEED rental income to help make the primary mortgage payment AND families are also looking to live together by having seniors or students of the family share spaces with parents or siblings. Housing is expensive! Back when rates were 2.5% for a 30 year mortgage, a payment with 5% down on a $500K home would have been $2,466 and at 8% would be $4,075 per month. We don’t expect interest rates to be coming down anytime soon, or housing prices to head downward. We’ll keep looking for that needle in a haystack but sadly we’ll most likely be battling other first time buyers in multiple offer battles.