The half million dollar fixer-upper

Early on our search, we had to give up on the dream of finding a fixer-upper for our first house. This old standby strategy for first-time homebuyers has really taken a beating from the stratospheric climb in home prices since the late 90s. And the recent credit crunch just might finish it off.

Sure, we ran across a lot of fixer-uppers in our search -- in a region full of old houses, that's hardly surprising. The shocking thing is how much they cost. Typical was a place in Watertown that badly needed new windows, complete updating of both baths, significant exterior repairs and painting, and more. It was priced at $575,000. After calculating the likely tab to bring the place to livable condition, we nearly fled.

Okay, suppose the place was overpriced and we could have bought it for $500,000 -- a typical price for a modest single-family these days. Still no deal. After the steep down payment increasingly required by lenders -- a minimum of 10% in most cases -- exactly where would we come up with over $40,000 for the "fixer-uppering?" Certainly not in cash. A home equity loan or line of credit right off the bat? Not likely in this credit market.

Perhaps it's too soon to declare the death of the fixer-upper for all but those who can remodel a bathroom with their own two hands. But you have to wonder.