The Death of the Starter Home

Whatever happened to the Starter Home?

In the game Cashflow 101, there are opportunities to buy two bedroom/1 bath homes at reasonable rates. In Cashflow 202, you can buy 1 bedroom/1 bath homes to use as rentals and investment properties. As I was reflecting on playing the game with my stepkids (vicious competitors... even at the age of 11!), I thought about those property offerings, and mourned the loss of common sense in my generation.

It used to be that your first property was a small place. You made sure it was in a decent neighborhood, had enough sun, had some character, it was reasonably priced, and big enough for you and a roommate (and maybe a pet). I mention the roommate, because having another person help you handle the mortgage was a RESPONSIBLE move to ensure you kept your budget in check. The house may not have been beautiful or palatial, but it was yours, and the satisfaction of that warmed you down to your socks as you wrote the check for your mortgage payment every month.

Well, those days are no more.

A friend of mine bought a 4-bedroom cottage house in Atlanta right after college. He bought a Lexus in the same week. Did he have a roommate? No. Is he in foreclosure now? Yes.

I was talking to a mortgage broker lately whose colleague approved a loan on a $500,000 home in California for a gardener who made $11.50 per hour. Not a landscape architect, not a builder... a GARDENER. That's what he put on the application. That's the application that was APPROVED. Is the house in foreclosure? Yes.

For those of you who know my regular discussion, you know I don't often "blame". There's no point in pointing the finger at mortgage brokers, Realtors, homeowners, Wall Street, the White House... everyone has a preverbal nickel in the dime that has crashed the economy. However, if I WAS to point the blame finger at someone or something, I would point it enthusiastically at the television.

On the "reality" (ha!) show, "Brooke Knows Best", Brooke Hogan moves into her first place... a huge penthouse in Miami that overlooks the beach and Miami's never-ending nightlife. Is that realistic? You're not even 20 years old... where's your starter home?

On the new show, "The Real Housewives of Atlanta", everything is diamonds, furs, mansions, maids, and huge SUVs. The women all says that you have to have this lifestyle to live in Atlanta, or else you're nothing. Well, I remember my mother telling me when I was in elementary school that peer pressure could be the downfall of every kid. Looks like she was right.

There are more and more examples of this. Kids in college (and younger!) are watching MTV Cribs and thinking, "That's what my house is going to look like." This is how foreclosure becomes rampant... trying to buy more than you can afford for showplace purposes. So many of those people who have bought that huge home and the fancy car are living on lawn furniture and eating crackers to survive.

No one is talking about the importance of the starter home... how that first home solidifies your wealth foundation, builds your credit, creates the first step to investment properties (plural) and help develop character and a sense of pride and discipline.

I say ban the television and break out the Monopoly board.