Housing market

[BCClone]

That's not what I'm saying. We were approved for $850,000 house and we bought one for $500,000. We could have made the payments on the more expensive house but chose to go the less expensive route. If we would have bought the $850,000 house we could still afford it but the 20% market gain would have been $170,000 increase. The 20% market gain for the house we bought has been about $100,000.

I am saying (knowing we could afford both payments), buying the less expensive house eliminated a $70,000 incerase in equity for us. We could have always sold the more expensive house and traded down, but now its *even more * expensive to trade up.


I don't need/want a big house. I'm talking from a financial investment perspective only. Where I live the more expensive houses aren't neccessarility bigger, just better locations and upgraded kitchens.

It’s why I always say to never include your house in your net worth. You are going to live somewhere and almost no one moves into a less expensive house.

 

[mywayorcyway]

Feels like in small town Iowa, we have plenty of us old people dying with houses people don’t want.

We have more new construction in town than I have seen in my ancient boomer existence. People want those houses, with the giant everything - walk-in closets, family rooms, kitchens.

When an old person who wants to stay in their own home dies, it usually gets bought after about a year on the market by an immigrant family.

Friends moved to be closer to grandkids and their beautiful old brick home that was well maintained spent two years on the market. Realtor heard rejections about the garage being too small, no family room, just a nice living room, no open floor plan, closet, bathrooms, and kitchen too small.

So many older homes sit vacant that various entities have tried fixing them up to sell, but they still sit on the market a long time unless they are made substantially larger. When my mother died over 20 years ago, a tactless guy at the funeral did ask my brother if he could buy our childhood home, but there wasn’t nearly as much new construction in town as now.

You're right, people don't want houses with garages that don't fit a modern SUV, or a have a 150 sq ft living room, or have bedrooms with six foot tall door frames. But can you blame them?

 

[simply1]

Feels like in small town Iowa, we have plenty of us old people dying with houses people don’t want.

We have more new construction in town than I have seen in my ancient boomer existence. People want those houses, with the giant everything - walk-in closets, family rooms, kitchens.

When an old person who wants to stay in their own home dies, it usually gets bought after about a year on the market by an immigrant family.

Friends moved to be closer to grandkids and their beautiful old brick home that was well maintained spent two years on the market. Realtor heard rejections about the garage being too small, no family room, just a nice living room, no open floor plan, closet, bathrooms, and kitchen too small.

So many older homes sit vacant that various entities have tried fixing them up to sell, but they still sit on the market a long time unless they are made substantially larger. When my mother died over 20 years ago, a tactless guy at the funeral did ask my brother if he could buy our childhood home, but there wasn’t nearly as much new construction in town as now.

Do you have an example listing?

 

[KidSilverhair]

It’s why I always say to never include your house in your net worth. You are going to live somewhere and almost no one moves into a less expensive house.

I’ve always hated the idea of looking at your house like an “investment” and “how much return” you can get out of it.

You have to live somewhere. It’s not like you can sell your house as an “investment” and cash in all the increased equity while you live in a van down by the river.

If you’re looking at it as something that can help you trade up down the road, I get that, but you’re never “cashing in” the full value of your increased equity until you, you know, take up residence in a pine box. And then that’s not you reaping the profits it’s your heirs (and the government, maybe).

 

[Dr.bannedman]

https://www.zillow.com/homedetails/Middle-Is-Alpena-MI-49707/115018947_zpid/

would anyone like to go halfsies with me??

277 acre island

 

[KnappShack]

I’ve always hated the idea of looking at your house like an “investment” and “how much return” you can get out of it.

You have to live somewhere. It’s not like you can sell your house as an “investment” and cash in all the increased equity while you live in a van down by the river.

If you’re looking at it as something that can help you trade up down the road, I get that, but you’re never “cashing in” the full value of your increased equity until you, you know, take up residence in a pine box. And then that’s not you reaping the profits it’s your heirs (and the government, maybe).

 

[besserheimerphat]

I'm with you. Got hosed when I bought my first car 15ish year ago into signing up for a warranty that added something like $3,000 to the final sale cost. Drove the car for 3 months with no issues until suddenly I noticed paint deterioration on a fairly large section of the car. Took it in and they deemed that it was probably a shoddy paint repair job by the previous owner. But not covered by the warranty. So I got to drive a new to me, 3 month old car with $350 monthly payments that looked like ass for another 4 years until I had it payed off finally. Needless to say on my next car that I am still driving, I did not let the salesman sucker me into any kind of warranty that didn't come free. And fortunately have had no issues and been driving it for over 7 years (2015 model). They really try to scare you with the electrical failure crap on these newer cars. I have never heard any stories first hand of that kind of stuff failing.

A dealer warranty on a new vehicle is probably a whole different animal than on a used vehicle. The new vehicle dealer warranties often come with service agreements where you have to have all your repairs and maintenance done at their shop. With used vehicles, the history is unknown so they have a lot more room to wiggle out of stuff.

 

[besserheimerphat]

My question--is there really a need for all of this stuff if it's functional as is?

I guess newer efficient windows can be a useful thing but the rest sounds like just keeping up with what's new when it doesn't have to happen.

Your house needs to make you happy though too. Otherwise you might as well rent. Why own something you don't like?

 

[clonechemist]

I’ve always hated the idea of looking at your house like an “investment” and “how much return” you can get out of it.

You have to live somewhere. It’s not like you can sell your house as an “investment” and cash in all the increased equity while you live in a van down by the river.

If you’re looking at it as something that can help you trade up down the road, I get that, but you’re never “cashing in” the full value of your increased equity until you, you know, take up residence in a pine box. And then that’s not you reaping the profits it’s your heirs (and the government, maybe).

Somewhat true, and yet… the pipeline of retirees selling expensive houses in the northeast to move to cheaper Florida condos is a stereotype with a basis in reality. If you live in an expensive housing market and plan for the move, it’s totally reasonable.

OTOH if you’re currently in a cheaper area like Iowa, you can’t really exploit that it the same way.

 

[carvers4math]

You say well maintained but has it ever been remodeled? That's the issue. Boomers bought home extremely cheap compared to the cost of homes today and never updated them or updated them 20 years ago. No one wants to 2/3 or 3/4 the cost of a new construction home for a place that will need $50k-$70k to update it. They sit because they're asking for too much money given the outdatedness of the home. While it's not as much of an issue in Ankeny I still see this same thing here over and over again. $400k for a 1992 built home without being updated (oh look the only thing they did was granite tops on old freaking cabinets) and wanting the same as new construction. Sure there's more SQ ft in the older home but the cost to update doesn't justify the asking price.

People have to ask, if the house is $400k and needs $60k in updates, is the house worth $475-$500 after all the money put in to update?

New houses here seem to be going for $375,000. They were asking $175,000 and sold for $10,000 less. They had remodeled both baths and the kitchen so everything was new within five years of listing, the complaints were they were not large enough rooms. The house had four bedrooms and finished basement. The garage was two door but not attached. They had a nice storage shed for lawn maintenance as well. Two blocks from high school, one block from an elementary. Good neighbors.

 

[cyfan92]

Do you mind me asking what industry you got laid off in?

Commercial Real Estate

 

[WISCY1895]

I live in the suburbs of Madison. Shocked by how quickly homes in the area are selling. Thought higher interest rates would slow it down. Especially in Dane county with inflated home values and very high property taxes.

 

[Pat]

What are the prices of these same homes today? Given they’d be preowned homes, but what is todays market value of these homes? Could they be afforded today with one income of someone without a college degree?

In Ames, there are a handful of sub-$200k houses on the market. That’s a maybe. If you move to Boone or Nevada… absolutely.

 

[Bestaluckcy]

https://www.zillow.com/homedetails/Middle-Is-Alpena-MI-49707/115018947_zpid/

would anyone like to go halfsies with me??

277 acre island

View attachment 114936

Suppose you’d expect me to live in the lighthouse.

 

[TrailCy]

You say well maintained but has it ever been remodeled? That's the issue. Boomers bought home extremely cheap compared to the cost of homes today and never updated them or updated them 20 years ago. No one wants to 2/3 or 3/4 the cost of a new construction home for a place that will need $50k-$70k to update it. They sit because they're asking for too much money given the outdatedness of the home. While it's not as much of an issue in Ankeny I still see this same thing here over and over again. $400k for a 1992 built home without being updated (oh look the only thing they did was granite tops on old freaking cabinets) and wanting the same as new construction. Sure there's more SQ ft in the older home but the cost to update doesn't justify the asking price.

People have to ask, if the house is $400k and needs $60k in updates, is the house worth $475-$500 after all the money put in to update?

My overall point is that people expect new construction prices for their older homes when they have done little to zero updating. Yes, well maintained is good but that does nothing towards the cost of updating. $10k-$15k for new efficient windows, $30k for a new kitchen and more if you're going to take down a wall. $10k for a new bathroom so probably $20k for two. So many also have unfinished basements so there's another $40k. So can younger people, the ones with incomes that usually require a college loans, afford the $2,500 a month mortgage for the old home plus the additional $70k cash to remodel? No, but they can afford the $2,500 mortgage for the new or newer built home without the updating costs.

I live in an area where a new home is either a $2 million dollar replacement of torn-down an old home or literally 45 minutes more down the highway.

When the new home versus the old home is a half mile difference I understand, but our '60s split-level is not the house we want but it is the location we want. You simply can't compare new verse old where we live.

 

[8bitnes]

Feels like in small town Iowa, we have plenty of us old people dying with houses people don’t want.

We have more new construction in town than I have seen in my ancient boomer existence. People want those houses, with the giant everything - walk-in closets, family rooms, kitchens.

When an old person who wants to stay in their own home dies, it usually gets bought after about a year on the market by an immigrant family.

Friends moved to be closer to grandkids and their beautiful old brick home that was well maintained spent two years on the market. Realtor heard rejections about the garage being too small, no family room, just a nice living room, no open floor plan, closet, bathrooms, and kitchen too small.

So many older homes sit vacant that various entities have tried fixing them up to sell, but they still sit on the market a long time unless they are made substantially larger. When my mother died over 20 years ago, a tactless guy at the funeral did ask my brother if he could buy our childhood home, but there wasn’t nearly as much new construction in town as now.

Those homes get rented within days in my small Iowa hometown

 

[carvers4math]

Those homes get rented within days in my small Iowa hometown

That used to happen more but people were not happy with requirements of the new city rental code.

 

[swiacy]

This past spring I asked a reputable realtor what was the cost of new construction and he said $140 per sq. ft. and that number is fair but obviously will change depending on location among other factors. Adding lot cost, $350,000 builds a decent house. What has changed is the need for additional sq. ft. in larger room size over the years, the market wants 3,500 sq ft homes not 2,000 sq. ft. homes.

 

[Gunnerclone]

This past spring I asked a reputable realtor what was the cost of new construction and he said $140 per sq. ft. and that number is fair but obviously will change depending on location among other factors. Adding lot cost, $350,000 builds a decent house. What has changed is the need for additional sq. ft. in larger room size over the years, the market wants 3,500 sq ft homes not 2,000 sq. ft. homes.

That doesn’t seem to be true in the markets I follow for new builds. In DSM metro the majority of new builds seem to be 1600-1800 sq Ft (without finished basement space included) and they seem to be behind or just keeping up. I pay most attention to the West burns + Norwalk-Cumming area.

This is what I would consider a “mid-level” new build and it has a “Waukee” premium.

670 Belmont Blvd, Waukee, IA 50263 - 4 beds/3 baths

(DMMLS) For Sale: 4 beds, 3 baths ∙ 1733 sq. ft. ∙ 670 Belmont Blvd, Waukee, IA 50263 ∙ $515,000 ∙ MLS# 675090 ∙ Giovanti Homes presents the Phoenix ranch plan in the Davbreak executive development, The Re...

redf.in

 

[IcSyU]

This past spring I asked a reputable realtor what was the cost of new construction and he said $140 per sq. ft. and that number is fair but obviously will change depending on location among other factors. Adding lot cost, $350,000 builds a decent house. What has changed is the need for additional sq. ft. in larger room size over the years, the market wants 3,500 sq ft homes not 2,000 sq. ft. homes.

Currently building a house...I would hate to see what construction you get at $140 per sq ft.

At least here, $350,000 gets you a split level unfinished basement 2 car garage 1,600 sq ft builder grade house. From watching the market around Central Iowa I haven't seen anything to suggest that market is too much different.