It’s the American Dream — a house of your own for you and your spouse and your anticipated children.
Early in this election year that part of the American dream became a campaign issue when Hillary Clinton characterized Bernie Sanders’ supporters as young people working as baristas and living in their parents’ basements. In other words, these young people were a long way from that split level with the big lawn that has been an icon of the American housing market since the baby boomers were kids in the 1950s and ’60s.
The common wisdom is that such a house is increasingly difficult for a first time homebuyer to acquire, particularly in a place like central New Jersey with a high cost of living. In fact, that “common wisdom” has been cited for many years. On page 53 of this issue Richard K. Rein shares his recollection of entering the Princeton real estate market at a time when everyone said all the bargains were gone and it would be virtually impossible for a freelance writer like him to buy a starter home in Princeton. The year was 1977. His solution: Settle for half a house — a semi-detached townhouse — to start and then work his way up to the real deal.
But common wisdom, cliches, and political characterizations aside, what kind of starter house is attainable today in the Route 1 corridor?
We decided to make a few assumptions (some more realistic than others) and project what a first-time homebuyer might be able to get in this central New Jersey market. Assumption No. 1: Our first time homebuyer (or homebuyers if the purchasers are a couple) have a household income of $104,000, the median household income in Mercer County, according to a 2014 American Community Survey by the U.S. Census Bureau.
Assumption No. 2 : That the general rule of thumb is housing costs should not exceed a third of one’s gross income. However, our imaginary but prudent house hunting household wants some financial cushion and is limiting housing costs to a third of its after-tax income. Setting aside 30 percent for income taxes, that comes out to $24,300 a year for housing costs or roughly $2,000 a month in principal, interest, taxes, and insurance (PITI). We also narrowed the selection to single-family houses with a yard — properties that would be unencumbered by homeowner association levies.
Assumption No. 3 (one of the bigger ones): That our house hunters have been very frugal (or very kind to well-heeled parents who also are eager to get them out of the basement) and that they can come up with the closing costs plus a 20 percent down payment on their starter home. That qualifies them for a mortgage without the mandatory primary mortgage insurance.
Assumption No. 4: That the buyers can obtain a 30-year fixed rate mortgage with no points at 4 percent (a conservative estimate — many can do better than that).
Given all those assumptions we started looking for available houses in the $300,000 price range. So what’s available? In some towns, such as Bordentown, Ewing, Hamilton, and Lawrence, houses under $300,000 are plentiful. In other places they are hard to find. Below are representative samples from nine central New Jersey towns — many more examples can be found in the ads on the pages that follow.
139 2nd Street, $229,900. Three-story Colonial built in the turn of the 20th century on 1/12th of an acre. Four bedrooms, three on the second floor and one on the third, 1.5 baths. Listed by Valerie Belardo of Re/Max at Home. www.remax.com/realestateagentoffice/columbus-nj-08022-valeriebelardo-id25442916.html.
The house has a downtown location that enables a walkable lifestyle. All the appliances are new and the bathroom and kitchen have been renovated. Monthly property taxes: $521. Monthly principal, interest, taxes, and insurance (PITI): under $1,500.
42 Delaware Avenue, $277,900. Three-story home with five bedrooms and 3.5 baths on a 124 x 206-foot, half-acre lot. Upper-level deck, with a winding staircase to an open patio and enclosed back porch. Listed by Debbie Olsen, Smires & Associates, www.smiresandassociates.com/agent/detail/1005577.
Located in the Mountain View neighborhood, this is one of the largest starter homes available in this price range. Built in the 1950s, the property has been on the market for more than a year, with seven price decreases. Potential for home office or in-law suite. Monthly property taxes: $942. Monthly PITI: under $2,100.
14 Dark Leaf Drive, $279,000. Two-story Colonial built in 2012, three bedroom, two bath house on a 58×174 lot. Listed by Eugena Garzillo of Gloria Nilson. www.eugenagarzillo.myglorianilsonagent.com.
Located three miles south of Robert Wood Johnson Hospital, the houses features an open plan first floor. All bedrooms, plus washer and dryer closet, are on the second floor. Backyard has in-ground swimming pool. Monthly property taxes: $615. Monthly PITI: under $1,800.
77 Poor Farm Road, $299,900. A 2,663 square foot raised ranch built in the 1970s. Four bedrooms and two-and-a-half baths on the main floor, with attached garage below. Listed by Desiree Daniels of Re/Max Hamilton. www.ddaniels.remax-nj.com.
The original asking price was $389,900. The property sits on a 2.5 acre lot. Monthly property taxes: $1,156. Monthly PITI: $2,500.
95 Denow Road, $279,900. Ranch with 1,757 square feet of living space, 3 bedrooms, 2 baths, family room with fireplace, detached three-car garage. Listed by Darlene Mayernik, BHHS Fox & Roach – Hamilton. www.teammayernik.com.
This house is located on wooded 6.55-acre lot, which abuts I-95 South. Being sold as is. “Township inspections and violations are responsibility of the buyer.” Monthly property taxes: $909. Monthly PITI: under $2,100.
225 State Road, $349,900. A 2,100 square feet two-story Colonial built in the 1950s, four bedrooms, 1.5 baths. Wooded quarter-acre lot. Listed by Lukasz Zdeb, Carrington Real Estate Services, Mount Laurel. www.nj-pa.carringtonrealestate.com.
On the market since May, the house, which is currently bank-owned and is reportedly under contract by a potential buyer, is on busy Route 206, about a mile and a half from Nassau Street and the heart of downtown Princeton. The buyer is responsible for all inspections. The kitchen cabinets and several rooms are painted in garish colors, but that could possibly be remedied with a fresh coat of paint. Monthly property taxes: $746. Monthly PITI: Under $2,200 a month.
Since the PITI payments on this house would surpass our $24,000 a year target, we decided to stretch our definition of starter home in the pricey Princeton market, and added this half house to the mix:
17 Moran Avenue, Unit 1, $324,900. First floor unit of early 19th century home that has been divided into upstairs/downstairs condominiums. 1 bedroom, 1 bath, eat-in kitchen, living room with fireplace. Laundry in unit, full, unfinished basement. Off-street parking. Listed by Gabriella Borges, B. Quest Realty, Union, NJ. http://gborgesrealestate.com
This property is being sold — as is — as part of a bank foreclosure. All inspections and certificate of occupancy requirements are responsibility of buyer. Monthly property tax: $672. Monthly PITI: $2,000.
7 Buckley Lane, $287,500. Four-bedroom, one-and-a-half bath ranch adjacent to the high school. The 1,800 square feet house was built in the 1950s on a 150 by 95-foot lot. Listed by Chris Hill of ReMax. www.mercercountyhomes.org.
Estate sale, the property is being sold as-is. There is an above ground pool, large deck, and attached garage. On-site septic. Monthly property tax: $885. Monthly PITI: $2,000.
12 Kensington Avenue, $255,900. Five bedrooms, 2.5 baths, 2,440 square feet with master bedroom and two bedrooms on the second floor, and two bedrooms and bath on the third floor. Finished hardwood floors, fireplace, enclosed porch and sunroom on first floor. Two-car garage. Listed by Sandy Brown of Gloria Nilson. www.sandybrown.myglorianilsonagent.com.
A 1937 Colonial in the Hiltonia neighborhood west of CadwaladerPark, this is the second most expensive house currently on the market in the capital city. The plumbing and kitchen are updated. Monthly property taxes: $720. Monthly PITI: under $1,800.
62 Bear Brook Road, $277,000. Three-bedroom, two bath, 1,276 square foot bi-level within walking distance of Princeton Junction train station. Listed by Roxanne Gennari of Coldwell Banker. www.roxannegennari.com.
The house was built under the Operation Bootstrap program, part of the U.S. Department of Agriculture Mutual Self-Help Housing Program that accepted “sweat equity” in lieu of a down payment. The house is no longer deed restricted as affordable housing. Monthly property tax: $533. Monthly PITI: $1,700.