American homes are not just getting dramatically more expensive. They are getting older too.

The median age of US households had risen to 39 years, according to the latest American Community Survey in 2019. For home buyers frustrated by fierce competition and rising prices, older homes are a more affordable option. One caveat, aging structures require more maintenance.

"In many markets, these older homes are more affordable – but they have increased repair and maintenance needs," said Danielle Samalin, general manager of Framework Homeownership, a company that coaches first-time home buyers. "Budgeting for maintenance and repairs is critical."

Samalin speaks from experience: She and her family live in a 1799 house in western Massachusetts.

Samalin loves the character of the house, though she admits that owning a house built during the John Adams presidency is not for everyone. "Some people think we're crazy," she says.

Why houses are getting older

The aging of the US housing stock is in part an ongoing consequence of the Great Recession. Overbuilding was a hallmark of the real estate bubble of 2005. Since then, building owners have built. In contrast to the massive suburbs of the 20th century, the houses that have emerged in recent years have become larger, more expensive, and fewer in number.

The result? There just aren't a lot of new homes in the US housing market. According to data from the American Community Survey, 65 percent of American homes were built before 1989.

Home buyers adapt to the new reality. According to a recent survey by TD Bank of Americans looking to buy their first home in 2021, 71 percent are not looking for a dream home. Instead, they buy a starter home or a fixer upper.

"This low inventory has been a problem since the 2008 financial crisis," said Scott Lindner, national sales director at TD Bank Mortgage. "We didn't really add a lot of inventory."

"We wanted the soul of the old homeland"

Samalin's 3,000-square-foot home has no air conditioning or a garage. When the house was built in 1799 there was no electricity and some rooms did not have overhead lights.

Despite the inconvenience, Samalin loves the house. "We are very happy here," she says.

Samalin tells home buyers that a range of state and local grants and interest-free loans are available to older home owners. She took advantage of Mass Save, a Massachusetts utility initiative that funds energy efficiency improvements.

This program is just one of many forms of financial assistance for homeowners who choose to invest in aging properties. State and local governments also offer home improvement programs and heritage conservation loans at favorable terms.

"It's important that people don't rule this option out," says Samalin.

While an older home may require more attention than a new location, she says there are lots of payouts. Her house was framed in locally cut wood, and she learned that the original owner of the house was a pastor who hosted more than 100 weddings in one of the rooms in the house. Such quaint details speak to their desire to live in a house with a story rather than a house made of cookie cutters.

"We wanted the soul of the old homeland," says Samalin.

"Sometimes it's like camping"

Dawn McMullan lives in a house near downtown Dallas that was built in 1870. When she and her husband bought their home 20 years ago, she was enchanted by the distinctive round windows of the Victorian house.

"I thought, 'The house is just calling me,'" says McMullan.

She also loved the vintage woodwork around the house. The brick chimney at the back adds to the ambience of the reconstruction period. McMullan knew the house was going to be a lot of work and the neighborhood wasn't great at the time – but these factors helped bring the house into its price range.

"The price was very cheap for Dallas," says McMullan. "I just felt like this was a unique area that was only going to increase in value."

This prediction turned out to be forward-looking. But maintaining an old house is an ongoing project.

"We gutted the kitchen and redesigned almost every room in the house," says McMullan. "It's certainly a money eater in many ways."

Since the house is located in a historic district, many changes require the approval of the city. And even after the upgrades, McMullan's house wasn't thoroughly modernized. For example, there is no garage.

"There is still a place in my laundry room from which I can look outside," she says. "Sometimes it's like camping."

While mortgages are available on old homes, appraisers can struggle to find comparable properties for their home, says McMullan – most homes in the neighborhood are 30 years newer. "It's such an anomaly of a house," she says.

In an incentive for years, McMullan received a property tax break that was part of a city program to attract shoppers to older neighborhoods.

Tips for Buying an Older Home

When buying an older or work-in-need home, closing down is just the beginning of a long process. Some tips for navigating home repairs:

  • Pay close attention to the house search. TD Bank's Lindner says this is your first chance to really get to know the hidden shortcomings of your home. "Buyers don't always take it seriously," he says. "Maybe they hang out in the living room while the inspector goes around. They should be attached to the hip. Really see the inspector as someone to go around with and find out about the property. "
  • Beware of cost overruns. One unwritten rule of home renovation is that no matter how thorough this cost estimate appears, you will discover costly new problems.
  • Consider a fixer-over loan. If you use up your savings on the down payment, you will run out of money to pay for repairs. One option: an FHA 203 (k) loan, a type of mortgage that allows you to borrow the purchase price and construction costs based on the value of the property after the renovation.
  • Look for other sources of help. Government and local home improvement programs, monument conservation loans, and energy efficiency programs can provide inexpensive money for modernizations. Some municipalities offer reductions in property tax.

Learn more:

source https://seapointrealtors.com/2021/08/02/americas-housing-stock-is-aging-it-can-be-a-buying-opportunity-with-risks/

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