How Much Is That Vineyard Starter Home?
Entry Level Prices Climb Well Beyond Reach

By Mandy Locke, Vineyard Gazette, Friday August 10, 2001

It’s the American dream. Years worth of savings emptied with a single check, offered as down-payment for that first home. It’s swallowing the fact that a large portion of the monthly paycheck will be devoted to mortgage payments for 25 or 30 years. It’s knowing that your children will be saving for their own starter home by the time you pay off yours.

But with the price of starter homes at least one and a half times higher on the Vineyard, the anxieties and joys of home ownership are beyond the reach of most middle class Vineyard families.

Realtor Judy Federowicz of Landmarks Real Estate sits patiently in front of her main office computer, waiting for the Vineyard’s computerized listing system, known as LINK, to return some results. She’s done this hundreds of times, looking for potential bargains for a client hoping to purchase his or her first home. After decades in the business, she knows that high home values on the Vineyard don’t often match the checkbooks of first-time home buyers. Nonetheless, she walks through the drill again, keying in options when asked.

“It’s hard. We’re very limited. They’ve got to be realistic and have a vision to make changes over time,” Ms. Federowicz said. When LINK asks the agent to enter a price cap for her search, Ms. Federowicz liberally types in $325,000. She doesn’t dare specify a town or proximity to water.

The computer spits out 35 matches for Ms. Federowicz to explore - a number of listings she’s pleased to see. But what can the first-time home shopper receive for this pretty penny? In Edgartown, you can buy a three-bedroom, one-bathroom home for $267,000, the lowest price in town. Situated on less than a quarter acre, a short walk from the school, this house brags of oil heating for the winter. The caption warns, however, that the home needs “TLC.”

Next on the list is a two-bedroom, one-bathroom home offering only 906 square feet of space. The seller wants $279,000. A “contemporary” home on Chappy with one bedroom, one and a half baths, goes for $315,000.

Edgartown this week has just seven homes for less than $325,000. Oak Bluffs, known among real estate agents for offering the most options in the starter home category, shows 18 listings ranging from $215,000 to $325,000. The two cheapest homes are gingerbread cottages on the Camp Ground. The catch: The buyer owns the house, but can never own the land - and even pays to lease the plot.

Below the Camp Ground listings is a two-bedroom, one-bathroom home (land included), for $229,000. But this home has electric heat, which Ms Federowicz says yields high utilities through the winter months. A 600-square-foot “ranch style bungalow” on one-sixteenth of an acre can be had for $235,000.

In the $300,000 range, the amenities become more appealing. For $296,000, you could buy a three-bedroom, one-bathroom, two-story colonial home with oil heat on a quarter of an acre. In Vineyard Haven, the story is much the same. If an agricultural motif is more your style, you can secure a 480-square-foot barn on half an acre for $269,000.

Abandoning these options, many will explore buying land and building a home to their design. A search for land on LINK reveals 110 listings, ranging from 10 acres in Chilmark for $3.5 million to a half-acre in Edgartown for $125,000. The “steal” on this list is a quarter-acre spot in Oak Bluffs for $95,000.

With housing costs running a minimum of $150 per square foot, the cost to build starts to outpace the option to buy a completed home. With the average size of the starter home on LINK registering around 1,000 square feet, building the most basic and modest of homes will cost at least $150,000.

Those who do not receive a strong dose of sticker shock when plugging in their own salaries to these formulas might be interested to see how some typical Vineyard wages fare.

Patti Young, vice president of Compass Bank in Vineyard Haven, works with first-time home buyers to figure out manageable loans and mortgages. Even though Compass Bank sponsors a number of programs to reduce the burden on first-time buyers, Ms. Young says many still can’t find a way to make it work.

“It’s terribly frustrating. Most come in with $5,000 to $10,000 to put down. In this market, it doesn’t work,” she said.

If an Edgartown school teacher and an Edgartown police officer, both on starting salaries, share a household, they can barely nudge into the housing market. The teacher contributes a $34,500 starting salary, while a police officer can earn about $42,250 (if the officer averages a 40-hour work week). If the couple takes advantage of Compass Bank’s first-time homeowner program - which waives closing costs and calls for just five per cent down instead of the standard 20 per cent – it’s still a challenge.

According to Ms. Young’s formula, this teacher and police officer, after taxes and insurance, can safely manage about $1,500 of their combined income per month toward mortgage payments. This allows them to qualify for about a $220,000 mortgage over 30 years.

If they bring an $11,000 down payment, the couple can spend just over $230,000 on a home. Added to the $11,000 initial down payment, the couple must be prepared to foot the 2% land bank tax on the price exceeding an initial $100,000. That brings the total up-front cost to about $13,000.

In other words, this dual-income family can afford only four of the 35 “affordable” listings (two of which sit on leased land) provided by LINK. None of these homes are in Edgartown, only one is in Vineyard Haven. Forget about up-Island.

And this teacher-police officer scenario presents a more ideal situation than is often found. Not many couples ably save $13,000 for a down-payment and land taxes, especially if they’ve been meeting the steep Island rental prices for many years.

“Everyone is aware of affordable housing. Zoning is the first step to making a difference,” Ms. Federowicz said, suggesting relaxing the zoning restrictions which prevent families from renting in-house apartments to people other than family members.

But this longtime Island Realtor, who has watched the climb in house prices, said she feels some sense of hope with the surge of discussions and initiatives for affordable housing this summer. “Finally the consciousness of the Island has reached the point where we can’t have snob zoning anymore,” Ms. Federowicz said.

Copyright 2001, the Vineyard Gazette, reprinted by permission.