Stretching to buy? Did you already?
It's easy to do in Greater Boston, where median incomes, as high as they are, are still out of whack with housing prices.
Just take Middlesex County. One of the wealthiest urban/suburban stretches in the country, it includes places like Cambridge, Newton and Wellesley, where prices may bob about, but never really seem to go down.
Median family income is high - roughly $100,000 in Middlesex County. But home prices, even after years of a down real estate market, are even higher, with the median home price of around $400,000.
For a family on the hunt for a house in the western suburbs - or for that matter across Greater Boston - it's not a question of whether to stretch. Rather, it's how much risk to take on in order to get a house that is not a complete wreck.
Is stretching always bad? No. It's not great, but there are times when it might make sense. If taking on another $50,000 in debt spares you from spending hundreds of thousands trying to salvage a home that is a complete wreck, but cheaper up front, it may be worth it.
However, too often it's not that easy - the fixer-up needs work but looks doable, while the home in better condition is not $50,000 more, but $100,000. Yet if you don't have experience in major renovations, you'd better double whatever rosy cost estimates you are banking on.
At that point, it may come down to betting that your income will eventually grow to more comfortably match your mortgage - that can be a tough one in today's economy but it all depends.
Anyway, that's my question for today - to stretch or not to stretch?
