'This old concept': Why young buyers ...

'This old concept': Why young buyers are cool on rehabs

There are 11 comments on the Chicago Tribune story from Aug 29, 2008, titled 'This old concept': Why young buyers are cool on rehabs. In it, Chicago Tribune reports that:

R emember when "This Old House" guru Bob Vila was convincing rapt television audiences how much fun it is to strip 12 layers of paint from ornate Victorian ceiling moldings? Oh the heady Everybody Rehab days.

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“Full service, discount broker”

Since: Apr 08

Chicago, IL

#1 Aug 31, 2008
If so many buyers are thought to be unrealistic then maybe sellers are being unrealistic as well.
Dont Go In Alone

Elk Grove Village, IL

#2 Aug 31, 2008
I would also like agents/brokers to stop using the words "priced under market" in their listings.

Under what market, 2007, 2006, 2005?? The news is the, price on the property IS the market today and in most cases are still priced too high. There are still too many unmotivated sellers in the market - no immediate need to move - still just trying to cash in on what was.

We need to get back to the tried and true - a house is a place to live in first - your "investment appreciation" will come with a long term outlook.
ejhickey

Chicago, IL

#3 Aug 31, 2008
This brought back memories of when I bought my first house in the 1970's near Wrigley Field. It was a 2 flat w/o a working furnace or electicity, but it did have running water (cold only) and I had to put 20% down. It took a month to get heat , electicity and hot water and to fix up the tenants apt enough to get $250 a month which paid my monthly mortgage and a small improvement loan. The trade off was that my place was rough (understatement) , but it was worth it when I sold it 8 years later for 4 times what I paid for it even after refinancing to get money to buy another fixer upper. This pattern repeated itself for another 20 years during which time I rehabbed several homes and sold them to people who promptly knocked them down and put up McMansions. These days I cannot go near a Lowes or Home Despot.
ads

Philadelphia, PA

#4 Aug 31, 2008
Pete

Chicago, IL

#5 Aug 31, 2008
ejhickey wrote:
This brought back memories of when I bought my first house in the 1970's near Wrigley Field. It was a 2 flat w/o a working furnace or electicity, but it did have running water (cold only) and I had to put 20% down. It took a month to get heat , electicity and hot water and to fix up the tenants apt enough to get $250 a month which paid my monthly mortgage and a small improvement loan. The trade off was that my place was rough (understatement), but it was worth it when I sold it 8 years later for 4 times what I paid for it even after refinancing to get money to buy another fixer upper. This pattern repeated itself for another 20 years during which time I rehabbed several homes and sold them to people who promptly knocked them down and put up McMansions. These days I cannot go near a Lowes or Home Despot.
Unfortunately bubble prices are so high this is not possibly anymore. Of course it will be in a few years, when sellers face reality and sell for what the market will truly bear.
FormerBroker

Cincinnati, OH

#6 Sep 1, 2008
Dont Go In Alone wrote:
I would also like agents/brokers to stop using the words "priced under market" in their listings.
AGREED-
Notice how the aGent in the story is quoted saying "they want it all for a very low price and that's unrealistic..."

Quite frankly, I don't think it's unrealistic at all. The market has quite a ways to go DOWNWARD, and the truly unrealistic people are the sellers who are holding out for their unrealistic prices.

Your house may have been worth $400K in 2005, and now you've slashed the price to $299K and you're pretending to be gracious in your offering price ??? NO NO NO. Try lowering it to it's REAL MARKET PRICE of $199K and maybe then.....just maybe you'll get a buyer.
be realistic

Sterling, VA

#7 Sep 2, 2008
pricing?

even though buyers always want lower, and sellers always think it's worth more...

realistic pricing.. must contend with land restrictions (location,location,location).. desiribility..

and maybe more important in "finding the bottom"... is with commodity prices for materials, labour costs.. the fact that building new replacement houses..excluding land costs-- may well already exceed the selling prices of existing homes already on lots...
even after adjusting for age and condition.. the reality of wishful thinking for further sustainable price drops beyond the current wave of foreclosures.. without a collapse of employment/or deflation of currency is perhaps unrealistic...
and the "unmotivated sellers" is probably more realistic of the fact that they may understand that they cann't replace their homes with anything better locally than where they live for its selling price..
Supply and Demand.. ultimately holds...
and without buyers, or too many vacant homes-- builders slow down (and have) and supply will dry up...

time will cycle out inefficiencies and balance back more accurate pricing... and perhaps quicker than expected..unless fear, or perceptions and/or real faltering economy weakens the economic basis of "value"...

and those unrealistic wishful thinkers (whether seller or buyer);unless "lucky" will either likely adjust to the market...or find themselves staying out of the market..likely watching from the sidelines....
while others profit or not from the current real estate market..

as like in all eras.. the winners and losers are determined by their decisions...

and matters beyond their control...
Biscuit

Montauk, NY

#8 Sep 2, 2008
"and maybe more important in "finding the bottom"... is with commodity prices for materials, labour costs.. the fact that building new replacement houses..excluding land costs-- may well already exceed the selling prices of existing homes already on lots..."

Considering labor and material costs, inflation adjusted, are flat for the last 10 years according to a recent study by Global Insight, I'd say it's time to put this LIE to rest. When one can build for $50 a square foot, why would anyone buy a USED house for $100/sq ft?
taken your money

Sterling, VA

#9 Sep 10, 2008
Biscuit wrote:
"and maybe more important in "finding the bottom"... is with commodity prices for materials, labour costs.. the fact that building new replacement houses..excluding land costs-- may well already exceed the selling prices of existing homes already on lots..."
Considering labor and material costs, inflation adjusted, are flat for the last 10 years according to a recent study by Global Insight, I'd say it's time to put this LIE to rest. When one can build for $50 a square foot, why would anyone buy a USED house for $100/sq ft?
Where's the lie? that adjusted inflation- is what determines much of the price!!!!...
supposedly a decently done study has shown "adjusted for inflation" home prices even at their peak.. have actually been "FLAT" for the last ONE HUNDRED YEARS!!!..
that arguement doesn't change the inflated price one must pay to build new... or buy used.. a comparable house..
Nor does the fact the U>S> is growing 3 million in population each and every year.. housing demand pressures on land and materials continue...
(except in areas where population is stagnant likely because of losing jobs etc..)
Land, materials, labour, fees, landscaping, driveways, sewer,utility connections/fees..etc..
Where in this country is that cheaper for new than existing?
Granted you can build cheaper in a less desired area than an upscale gated community.. but again.. existing homes in either will most likely be less... perhaps much less when the cost of everything included is included..when building within the same neighborhood...
Your market and labour must really be different from ours...(that labour and materials "adjusted for inflation over 10 years- kinda ruins a $50 sq foot price too)... of course don't forget, at least here locally and many markets that just land/lot prices can eat up much of that $50 sq..
the kitchen alone adds considerable.. when outfitted to today's standards....
Apples and Oranges.. are you comparing granite countertops, quality carpets (finished wood floors can be 5-6 a sqaure foot..plus labour to install (add the sub floor /etc..)..
? Will Contractors in your area actually build anything decent for $50 a square.. not counting the land and prep costs (local builder has the bills to prove over $20,000 for the dirt fill alone- a major dent in that $50 square- for a small house probably around 1500 sq or less!)- with land clearing.. there's $20. a square! How many buyers don't realize what his lot will cost just to bring to code)....
Or the upgrades necessary to bring that Promo priced unit up to the Jones's existing upgrades.. to compare prices...
taken your money

Sterling, VA

#10 Sep 10, 2008
but you're right.. few would buy at $100 old, if the actual market/ available new home price in your area is only $50 bucks...
but doubt if that's the case.. then that many in an area like that.. would really be asking $100 in such a low priced market... unless Lot Location/ land value.. is actually the reason to justify the pricing..
But also don't discount the value of additions, upgrades,much larger lot sizes, with mature landscaping, garages, pools,porches,decks... often included in existing home sales.. that can be missing from those cheaper new home sales..
or the nearest to desired schools,stores, employment..

Apples.. and Oranges....

as that's most often the case.. when seeing pricing differences..
Since no matter what- the house depreciates and the style becomes obsolete...thus worth much less with time. it's the land LOCATION, LOCATION, LOCATION.. that matters..
most every town.. has high value vs.. undesirable low priced areas.. and desirability of neighborhoods can change quicker than homeowners wish to acknowledge...

just as many seem to think abandoned foreclosures needing tens of thousands of dollars of repairs.. is setting the value for well-cared for homes in good neighborhoods...

Even in lousy markets.. in good stable neighborhoods with jobs...
few seem to be willing to sell for less and settle for even less in a repurchase..
But for Americans.. in all price ranges.. be it rental,purchase, or even gov't subsidy.. there remains options for those willing to pursue the alternatives for shelter that they can afford....
And apparently still $50 a square new in some areas! even though 1500 sq foot on a lot.. for only $75,000 new seems surprising to many no doubt! especially with the median over $200,000 for existing...
please share that location.. more than a few might be interested...
as some might want in on that price..
before the kind of deal gets away.
taken your money

Sterling, VA

#11 Sep 10, 2008
Biscuit wrote:
"and maybe more important in "finding the bottom"... is with commodity prices for materials, labour costs.. the fact that building new replacement houses..excluding land costs-- may well already exceed the selling prices of existing homes already on lots..."
Considering labor and material costs, inflation adjusted, are flat for the last 10 years according to a recent study by Global Insight, I'd say it's time to put this LIE to rest. When one can build for $50 a square foot, why would anyone buy a USED house for $100/sq ft?
Where's the lie? that adjusted inflation- is what determines much of the price!!!!...
supposedly a decently done study has shown "adjusted for inflation" home prices even at their peak.. have actually been "FLAT" for the last ONE HUNDRED YEARS!!!..
that arguement doesn't change the inflated price one must pay to build new... or buy used.. a comparable house..
Nor does the fact the U>S> is growing 3 million in population each and every year.. housing demand pressures on land and materials continue...
(except in areas where population is stagnant likely because of losing jobs etc..)
Land, materials, labour, fees, landscaping, driveways, sewer,utility connections/fees..etc..
Where in this country is that cheaper for new than existing?
Granted you can build cheaper in a less desired area than an upscale gated community.. but again.. existing homes in either will most likely be less... perhaps much less when the cost of everything included is included..when building within the same neighborhood...

Your market and labour must really be different from ours...(that labour and materials "adjusted for inflation over 10 years- kinda ruins a $50 sq foot price too)... of course don't forget, at least here locally and many markets that just land/lot prices can eat up much of that $50 sq..
the kitchen alone adds considerable.. when outfitted to today's standards....
Apples and Oranges.. are you comparing granite countertops, quality carpets (finished wood floors can be 5-6 a sqaure foot..plus labour to install (add the sub floor /etc..)..
? Will Contractors in your area actually build anything decent for $50 a square.. not counting the land and prep costs (local builder has the bills to prove over $20,000 for the dirt fill alone- a major dent in that $50 square- for a small house probably around 1500 sq or less!)- with land clearing.. there's $20. a square! How many buyers don't realize what his lot will cost just to bring to code)....
Or the upgrades necessary to bring that Promo priced unit up to the Jones's existing upgrades.. to compare prices...

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