Is the starter home dead on South Shore?

Much has been made of the lack of housing inventory recently. This is something that has been documented in virtually every housing market in the developed world, not just the U.S., California or Lake Tahoe.

There has also been much written on the two markets that appear to be the primary focus of new construction these days; either pricey homes for wealthy individuals or affordable housing with government subsidies. To oversimplify it, there is construction for the rich or the poor, and the “missing middle” continues to be left out of the mix.

But as they say, all real estate is local. As of early October, there are 56 homes, townhomes and condos listed for under $400,000 in the South Lake Tahoe area. Twenty-three of which are $350,000 or less and some of those are three or even four-bedroom homes. Why are people not buying these homes?

Do these homes have granite countertops? Probably not. Stainless steel appliances? Doubtful. Do they have 2,600 square feet (the average square footage of a new home built in the U.S. today)? Nope. But most of these homes appear to be quite livable with only some degree of fixing up.

When I ask my parents or my in-laws, about what their first home was like they laugh out loud. They share stories of planting trees and flowers because there literally wasn’t anything planted when they bought it. Painting each room one by one because they couldn’t afford a painter to do the house before they moved in. Using the fireplace for an entire winter because the furnace went out. Not only were they not afraid of a fixer-upper starter home, that was the basic expectation back then.

While I’m not suggesting by any means that our local housing inventory is sufficient or in top shape (because it isn’t), I do believe that we have existing inventory that can meet the needs of some in our community that want to buy a home, but think they can’t afford one.

Now is a great time to explore your options if you are in a high-rent apartment or have had to move recently due to your rental being sold. Sometimes a mortgage is not much more than the high rents being charged now, and you won’t have to worry about your landlord kicking you out. But how do you find a good starter home?

The key is to ask for help. Most of us have a friend that’s a realtor, it’s Tahoe after all. Have you asked them lately about what’s available within your budget? Do you even know what your budget is? If not, consider talking to your bank about what you might qualify for. There’s arguably nothing more important to comparison shop for than a mortgage so ask a local mortgage broker too. A mortgage broker can also help you find lending options for duplexes and multiplexes, which will bring in extra income.If the house will need substantial work to get it in good condition, make sure you talk to your broker about that and take it into consideration with your financing. Also, if you are purchasing a condo, you will need to consider the Home Owners Association (HOA) fees, which vary but are generally around $300 monthly – in addition to your mortgage, insurance and tax cost. Lastly, even if traditional lenders say you don’t qualify, some sellers may be willing to finance the home as well. Once you know what your budget is, and you found a realtor to show you some properties, make sure your expectations are fair. Instead of comparing homes to your friends or family members that have owned for many years and perhaps trading up over the years, try comparing them to your last rental property instead. Does it need paint? That’s not that hard. Is it missing any semblance of a yard? Who lives in Tahoe and doesn’t like getting dirty? Without question our community needs more affordable housing, long term rentals, and improved housing options, not to mention creative solutions like access to in-law units. The Tahoe Prosperity Center and many local partners are working diligently on these ideas, but changes will take time, so while we wait for progress on these fronts don’t be afraid to learn what options are out there now. You might be surprised. And I would love to see more local residents as local homeowners here on the South Shore.

Chase Janvrin is the Program Manager for the Tahoe Prosperity Center and oversees the Housing Tahoe Partnership project. He has a background in real estate and finance and lives in South Lake Tahoe with his family.