The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: MrBojangles on January 04, 2019, 08:06:40 AM
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Well, it was supposed to be a seller's market last summer...
A rising tide does not raise all ships! Location. Location. Location. Even in a seller's market.
Remodeled a kitchen, put in new floors throughout. Realtor thought I would get multiple offers from the start, I ended up dropping the price about 2% and then another 3%, and no offers.
Challenges. It's a rental property. Potential buyers do not realize they are not buying the ratty couch. Cat present and fairly neat (uses litter box fine) but cat hair.
Not to stereotype, and I had never tried to sell a house before, and with few properties for sale in the area, folks seem not to be desperate to buy a place anymore. Millenials want perfection, perhaps they get help from parents and don't need a starter home, etc. Also, they don't expect to do a lick of work. When I grew up, fairly poor, you were just pleased to have a roof over your head. It's not a bad area, fenced in yard, etc. The school district gets ratings of 4 and 5. A neighboring one gets 6 and 7s.
I had no idea the world revolver around school districts. The other district is much more desirable.
Comments? Would love to hear from sellers as well as Millenials, and others, who are purchasing homes.
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Dude why the hate on Millennials? Sounds like you don't have a competitive house sale. That's all there is to it.
My SO and I are currently looking into buying a house and the market seems to be in a small decline, lots of houses available, and not everyone selling seems to have come to terms with that so we're fine waiting 6-12 months to see how things shake out. The houses that I see go quick are the ones that are priced well. I could care less if the house looks like it's a cookie cutter from the 90's. If I want to reno the kitchen I can do that, but I am going to expect an under-market value for not being up-to-date.
If I can choose between an old rental, and a personal property that was obviously loved for the same price, which one am I going to trust more?
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Dude why the hate on Millennials? Sounds like you don't have a competitive house sale. That's all there is to it.
My SO and I are currently looking into buying a house and the market seems to be in a small decline, lots of houses available, and not everyone selling seems to have come to terms with that so we're fine waiting 6-12 months to see how things shake out. The houses that I see go quick are the ones that are priced well. I could care less if the house looks like it's a cookie cutter from the 90's. If I want to reno the kitchen I can do that, but I am going to expect an under-market value for not being up-to-date.
If I can choose between an old rental, and a personal property that was obviously loved for the same price, which one am I going to trust more?
I can totally see this, SFH buyers and millennial's (which I am) do not want to do any work what so ever. Most folks in my demo are not even willing to repaint a room. So they most definitely wont be able to see past the renters crappy belongings. Thus why people paint every room a neutral color and hire staging companies to put tiny furniture into it.
Selling a rental as primary residence to the buyer can be a tough sell.
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Drop the price. And try to avoid all the butt-hurt narratives about house-buyers. It's a business transaction. Mortgage rates are going up. The market is softening. That's all there is to it--drop the price.
If you could market it more effectively--you know, getting rid of the cat and the ratty sofa, having professional pictures taken, staging the place--you might be able to get your asking price. But you can't. You have a tenant. Getting rid of the tenant in order to sell the place more effectively doesn't seem to be an option? It might take too long and the market would soften even more? You'd lose out on a couple of months' rent? Well, ok. Then drop the price. A house is a piece of merchandise, granted a slightly more complex piece of merchandise than, say, a pair of shoes. But a lot of the same rules apply. If it's not selling, you have to drop the price, not blame the people who aren't buying it. If you want it gone, do like Target with Christmas tchochkes during the fabulous after Christmas sale: slash the price!
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Seriously, what the hell with the millennial hate? I was going to answer your question- yes, I sold our house recently, in Nov, made a tidy profit with all the WORK we did on it- but I'd hate to break your millennial hating ideals here. Christ. I suppose I'll try anyway.
Yes, when we were buying, I DID pass on buying many houses with cats, because for those of us who are severely allergic, that means the potential of a full carpet replacement, repainting all walls, etc etc. The place we bought had indeed been a rental (for other millennials no less) before we bought it. It had been empty for months because their first deal fell through and they had to do some work. Filled with spiders and muggy as shit when we viewed it. Carpeting was in rough shape but was nearly 15 years old, so that was expected. Otherwise it was all just concerns with being outdated cosmetically, and old appliances and water heater that ended up needing replacement. We expected it to be a forever home, though that's not how life went. Replaced all light fixtures, did some plumbing, some painting, then we re-carpeted before we sold. We were on the market 2 days before our first offer, 4 days before the second.
Drop the price and swallow your pride.
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I agree. Millennials are so entitled, wanting to buy a house that doesn’t suck at a competitive price.
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with few properties for sale in the area, folks seem not to be desperate to buy a place anymore. Millenials want perfection,
Honestly, as others have said, this isnt a millenial issue holding you back. Its basic economics.
But it almost seems that you are upset that people arent so desperate that you can make a tidy profit at their expense?
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All RE is local, but if you follow the larger markets in the US (just check CalculatedRisk every few weeks) you can pretty clearly see that the end of the big-time sellers market was spring 2018. Inventory is way, way up in many places, and with interest rates also up, prices are stagnant or in some places declining.
Now, the labor market is great and lending standards have been quite rigorous for the last decade. Barring some crazy black swan North Korean nuclear attack, we're not going to see a crash like 2007-2009. But if you're looking to sell a house, you need to temper your expectations and price pretty aggressively. Especially if you have a renter-occupied property that sounds like it shows like shit in a mediocre school district.
As those darn Millennials are so fond of saying, SMH.
Either ditch the renters (ie, pay them to leave) and stage/paint/etc, or else drop your price a lot (as in, 10% or more).
-W
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My wife and I have bought 4 houses. 2 were primary residences that we made painted + other small improvements that helped to get our money back plus a little after a couple years. This was in an area that was LCOL and the market did not come back as strong as some big metro areas. One was a small house/cabin with 100 acres in a very rural area. Extensive work on roof, foundation, clean up, etc. Planted thousands of trees, cleared some land, timber management plan for tax incentives, other fun stuff like that. Might be selling portion of it with cabin this year. Now have a duplex project that we remodeled one side and moved in and currently working on the other. Most of the remodeling was surface level - painting, flooring, cabinets, exterior fence, appliances, extensive cleaning needed due to low quality renters for 5+ years. Want to buy a place with acreage in summer of 2020 and it will probably be a place that needs some work. Have to decide if we will rent both sides of duplex or sell it at that time. Darn millennials I guess.
If someone is buying your place as a primary residence when are the tenants going to be out?
When it comes down to it, there is only one reason a house won't sell - price is too high.
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Where is the property? Winter is a pretty brutal time to sell a house in most US markets. Weather aside, people want to move in Spring/Summer and get into your 4/5 star school district - not right after Christmas.
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When I grew up, fairly poor, you were just pleased to have a roof over your head.
Uphill, in the snow! Both Ways!
In previous generations, you could also afford a house on a single (minimum wage) salary. Things change, and it's not necessarily the fault of all those darn Millennials.
As mentioned by others, it sounds like you might need to drop the price some more, and possibly get the tenants out, if possible. How much time is left on the lease? If the new owners will be expected to honor the tenants' existing lease for more than a few weeks that might be part of the problem.
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Older millennial here - we've bought two houses and sold one.
We bought our homes based on a couple of factors: under our budget, walkable neighborhood, good school districts. We didn't have kids with our first house, but knew that we'd likely have to sell within a few years and better school districts have easier resale.
We did a lot of work on our first house (our budget was smaller) sold for a nice but smallish profit seven years later, and opted to buy a house with less work involved for our second house because we now have two small children and even busier jobs.
We sold our first house to slightly younger millennials who also bought for the walkable neighborhood and school district.
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Millenial with two homes here. Both needed (one still needs) a lot of work (one just aesthetic, the other aesthetic plus major structural and pest). There are buyers out there that don't mind transforming a crappy rental to a nice house, but they'll want a deal. The schools matter for someone wanting owner occupied if its over two bedrooms. It also matters if the private schools are expensive. In our market, private school is ~$35K a year for grade school so it matters.
My advice, take your home off the market, buy out your tenants, do the easy stuff- repaint white, clean thoroughly, refinish the hardwood, rip out any carpet (IMO the easiest upgrade ever accomplished), and replace kitchen counters with butcher block if you've got tile or old granite. You can probably have a handyman do all this for $5K and have your price return be 10x.
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Okay, specifics while wanting to remain anonymous.
I purchased the property for about $185k in 2009. Started looking in the 140 range, nothing decent. Had to buy in this range. Sellers would laugh if you did not offer within a grand or 2 of full asking price. Bought after the recession as a comp for this place sold for 235k in 2006. Small town, near a major highway, 15 miles or so near a small city, 1 1/2 to 2 hrs to two major cities. Amenities nearby, doctor, dentist, supermarket, etc.
Better school district is 5 mi South. Amazingly, folks will pay 50 to 100% more to be in a better school district. I never even considered school districts then, just saw it was cheaper so close to everything.
I received the $8000 home buyers credit, which, IMHO should never have disappeared. But it did. And here is what happened to real estate. It got hit hard 2010 and a few years afterwards.
It had a 1980's kitchen, some sloping to floors as is over 100 years old. Water damage meant I put in all new oak hardwood floors and a new kitchen with granite countertops and stainless steel appliances.
When I was looking to buy, I did my homework, like the Frugalwoods. I did not have the benefit of being in or near Cambridge, Mass however.
Went with a realtor from the small city nearby. She wanted me to get it on early spring, but it was still being remodeled. I got it on the market late June, photos looked good, still needed some painting. Decided to list at 205k, which is basically no profit over 10 yrs. I don't understand this, except the realtor concluded I bought during a buyer's market nationally and tried to sell during a seller's market nationally, but the local trends are not the same. Even the small city realtor didn't understand the local trends.
I dropped the price to 200k after a few months and then 194k a few months later.
Despite the listing agreement stating will be painted in full by closing, feedback was that it needs too much work, and the floors are crooked.
I don't mean to stereotype, but folks looking for homes now don't want to pay anything for them and they are entitled and lazy. It's expected that you will paint the house the colors you desire, etc!
Not that I watch HGTV, but so much for that crap! They lead you to believe every impmovement is money in the bank. All that junk is is an infomercial for the building industry.
If I had 30 folks walk through in a few weeks, I'd kick out the tenant tomorrow. Given that I had 9 showings in 6 mos time, I keep it rented.
I planned on doing over the kitchen in about 2025 and then selling it. An insurance check made this happen sooner. I am ripped already about this and would be much more so if this was paid for from my savings.
I pulled it off the market before Christmas. Am debating whether to even list it in the spring. When I pulled it off the market, had I sold it, I still would have not turned a profit on it after paying real estate fees, and this is with a new kitchen and new floors throughout.
When I bought the place, it appraised out fine. Not sure what gives???
This is despite buying during a downturn and supposedly a good economy since then
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Millenial with two homes here. Both needed (one still needs) a lot of work (one just aesthetic, the other aesthetic plus major structural and pest). There are buyers out there that don't mind transforming a crappy rental to a nice house, but they'll want a deal. The schools matter for someone wanting owner occupied if its over two bedrooms. It also matters if the private schools are expensive. In our market, private school is ~$35K a year for grade school so it matters.
My advice, take your home off the market, buy out your tenants, do the easy stuff- repaint white, clean thoroughly, refinish the hardwood, rip out any carpet (IMO the easiest upgrade ever accomplished), and replace kitchen counters with butcher block if you've got tile or old granite. You can probably have a handyman do all this for $5K and have your price return be 10x.
But I've done most of that already! Ripped out a wall to open up the kitchen, new stainless steel appliances, new cabinets and granite countertops. Painted white throughout, 75% complete. Hardwood floors throughout, except in laundry room (tile). All brand new. Bathroom not water damaged, redone in 2007.
I reduced the tenant's rent in return for painting. His lease ends the end of April. He moved in in November, was supposed to clean up the yard some...we'll see.
I always thought there were buyers everywhere for modestly priced houses such as mine. No one seems to have the mentality that I had better buy this house now or else I will have to pay a whole lot more later and end up with a whole lot less.
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I would be careful throwing around the word "entitled" based on your post, dude. People are not obligated to want your house, and you're not owed a profit on a speculative investment.
The house isn't desirable. Sounds like the area/location just aren't doing it for potential buyers if you've really fixed things up nicely. So you can drop your price more, or you can keep renting it out and hope that prices rise in the area in a few years (though it doesn't sound too likely). Pretty simple.
Question: it sounds like this was your residence for a while and then you moved out/rented it. Why did you hold onto it as a rental? What has changed since then that makes you want to sell it? If it was a good rental a few years ago, presumably it still is now, right? Who cares what the market value is - if you're cash flowing it as a rental, just let it stay rented.
-W
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It does take a specific type of buyer to take on a 100 year old house, especially if you live in area that has plenty of new builds. Our second house we bought was an old one, but we bought it in an area known for historical cuteness. The new builds up the road usually turn over faster than the historical homes. Old homes are quirky and take work.
If your home has any neat historical features it might be worth playing them up? I know plenty of people who deal with sloped floors if it comes with original molding or door hardware.
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We found it impossible to sell with a tenant. We sold fast once the tenant was gone.
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It's ironic your calling millennials entitled when you come across as such in all of your posts. You aren't owed anything from anyone, including a high paying job or the sale of your house. Stop blaming other people when you don't get your way and start acting like an adult.
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Sounds like you might have bought too high? Or possibly over-improved for the area. School zone definitely matters for lots of people. Either way, the market is telling you that your price is too high. Real estate goes up and goes down...definitely not a slam dunk like some people think. If you can’t sell it for the price you need, I guess you’ll have to either keep renting it out, or do a short sale.
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School district means literally more than anything you did for a starter house. Why buy a house if you don’t have kids? The answer is, there are very few rational reasons to do so that aren’t investment oriented. If you have kids, you want them in schools that suck. That’s not amazing, it’s one of the most basic rules of real estate (location...).
It sounds like you’re trying to sell ancient house, with no special benefits. You mention sloped floors. An old house with defects is not desirable for young parents who are busy parenting and earning money. Who wants to remodel an old house in a crappy school district? If you really had so few people look at it, it’s either over priced, ugly, or both. From your post and reading between the lines, it sounds like it might be both.
Worse is that it is far as hell away from major cities. You say 1.5-2 hours from major cities. That’s 3-4 hours return trip travel. It’s outside of a reasonable commute or even a pleasant day trip.
The market isn’t that spectacular anymore for sellers. Rising rates mean buying is less attractive. Honestly, it sounds like you really overpaid for a dump during a sellers market, fixed a lot, and found you fixed a dump that wasn’t worth what you spent.
FYI, when it comes to spending hundreds of thousands of dollars, people aren’t entitled and lazy. They’re cautious and reasonable. It sounds like you might have benefitted from forethought before buying the sloped floor 100 year old house in a crappy school district.
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It's ironic your calling millennials entitled when you come across as such in all of your posts. You aren't owed anything from anyone, including a high paying job or the sale of your house. Stop blaming other people when you don't get your way and start acting like an adult.
^Saved me the typing.
Amazingly, folks will pay 50 to 100% more to be in a better school district. I never even considered school districts then, just saw it was cheaper so close to everything.
People paying much more for a better school district is a basic. I've never sold a house but my home's tax appraisal is up more than 700% since purchase. I rent out rooms and have earned more in rent than the entire purchase price. My area in the school district was a "bad" area and still mostly is. Fwiw, "bad school district" is often code for "the neighbors are scary black people" or "scummy poor people live here". Ratty couches and sloping floors could reinforce such impressions. Maybe you have to reprice as a result? In any case, being surprised at the school issue suggests to me the biggest issue is you must keep learning more.
Some lessons are expensive. It sounds like you're paying for a few of them now. I have made my own mistakes, so I sympathize. Based on my own life, the realtor's comments sound like nice things to say to an unhappy client, not necessarily honest evaluations. Maybe a realtor who knows the exact market you're selling in, not just the "nearby" city, could give more accurate assessments. Anyway, good luck!!
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If I had 30 folks walk through in a few weeks, I'd kick out the tenant tomorrow. Given that I had 9 showings in 6 mos time, I keep it rented.
Read the part of your statement I bolded. Read it again. And again. And again. Think about what it means. Ask yourself whether such a small number of showings might just be an indication that your asking price versus size/condition of your home is out of line with other houses in your area.
The problem isn't "those damn millennials", it's that you're asking too much for your house relative to what the market will bear. You need to drop your price if you want to sell. Either that, or your house doesn't look attractive in the pictures you've put up, and you need some photos that show the house in a better light.
Sorry if this comes across as harsh, but if you've only had 9 showings in 6 months it's a pretty obvious sign that EVERYONE(not just millennials) thinks your house is worth less than you think it is, and that you need to adjust your expectations accordingly.
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Well, when I bought it, it was after the bubble burst. A house a few blocks away sold for $50k more a few years previously and it's comparable. I had comps when I purchased this property and it appraised at more than I bought it at.
I thought I had bought in a dip after the recession and the reasons why I bought were twofold. Rentals in the area were disgusting and overpriced. Also, having bought when prices decline, I thought it was ripe for rebound.
I know many are Millenials out there. Many are entitled, probably most of them are not on this forum. I know of one who stays at home all day, daddy gives him money, cannot hold a job despite a degree in accounting. He has trouble keeping a schedule and being told what to do.
Why the animosity towards me? Didn't you all sit in college thinking I'm doing this to make it big? Something is seriously wrong in a world where a painting can sell for over $400 million, and yet most folks are lucky to have 1/10 of 1% of that. And that's my point! It sure is EXPENSIVE out there. Folks need to be compensated accordingly. How can more and more folks go to college and wages go nowhere?
The house, BTW, is a Victorian. Unique in appearance, not unattractive. It was the best I could do at the time to actually have a yard. At the time, folks were doing the long commute to have that. That appears to have diminished over time. Small town America isn't what it was anymore. Also, everyone wants brand new. It's amazing anything historic can sell anymore.
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If I had 30 folks walk through in a few weeks, I'd kick out the tenant tomorrow. Given that I had 9 showings in 6 mos time, I keep it rented.
Read the part of your statement I bolded. Read it again. And again. And again. Think about what it means. Ask yourself whether such a small number of showings might just be an indication that your asking price versus size/condition of your home is out of line with other houses in your area.
The problem isn't "those damn millennials", it's that you're asking too much for your house relative to what the market will bear. You need to drop your price if you want to sell. Either that, or your house doesn't look attractive in the pictures you've put up, and you need some photos that show the house in a better light.
Sorry if this comes across as harsh, but if you've only had 9 showings in 6 months it's a pretty obvious sign that EVERYONE(not just millennials) thinks your house is worth less than you think it is, and that you need to adjust your expectations accordingly.
How low do you go? Where else on the East Coast can you have a house with a brand new kitchen and floors, 3 bedrooms and an office, and a 1 1/2 bay garage, and more, for under $200k? The area isn't horrible, either.
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By the way, I think I will kick the tenant out if I even list it this year. Too many hassles trying to sell it otherwise.
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If you've had very few lookers over months of listing, it's waaaay too high.
Lots of looking but no offers, you're priced too high but maybe 20-30K lower will get it into the ball park.
You likely put too much into the renos, and I honestly would go back to looking for aggressive/hungry realtors that are not going to blow sunshine up your skirt and give you more realistic comps/pricing for this property.
No one cares about the comps, or what you paid when you bought it, or the realtor thought it might be worth, or whether you've sunk X amount into renovations, or what you think/feel/whatever about how much it should sell for. The simple fact: you're too high priced for the area and you're not going to sell it unless things take off significantly or you lower the price significantly.
It has nothing - NOTHING - to do with the buyers available. It has everything to do with your unrealistic expectations on what you think you should get out of this property.
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If you kick the tenant out, consider getting a professional stager to make your home look nice. Looking nice and re-configuring furniture placement can really help potential buyers get a feel for the place. And if you are already familiar with the comps and know that your house is priced fairly, then sometimes it's just about showing it well.
Anecdotal data: Back in 2008, my family tried to sell our luxury 2-year-new 2-bedroom condo in a good location and excellent school district, and had no takers for over 3 months. Brought in a stager who came with good references who basically got rid of all our furniture and put in all of her own high-end, modern furniture that suited the look of the condo. It sold within two weeks for slightly less than asking. I don't even think we dropped the price.
Moral of the story: Making your house look good to potential buyers is important (not based on your opinion of what looks good, but based on the opinion of a professional decorator with a proven track record selling homes).
Also, obviously, fix structural issues (if any).
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I recall a time when it didn't really matter what property you bought. Hold onto it a few years, it was better than money in the bank. Some books I read way back basically stated, back then, that you hold onto a property 7 years, you were assured a profit. Not now...
What I have trouble understanding is how can you purchase a property AFTER the bubble burst, have several years of price appreciation in the market nationwide, and still have such poor growth!?!?
Properties HAVE sold in my ballpark range in the last year. The tenant helps nothing, however.
LAST time I buy in an area without researching school districts. I live in a better school district now, and taxes are significantly higher, the area is congested/over developed, traffic is worse. But, amazingly, this is what people want.
Since my observations are not particularly good, is it an old vs new thing? I have never been one for cookie cutter houses, and I admire the craftsmanship available only in older houses. I might be a rare breed today??? I almost feel that younger generations would prefer just to plough everything under and just have all new. Just look at the antique furniture market. You can now purchase beautiful pieces at 10% or less of what they were selling for 20 or 30 years ago and they are older than this country.
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I'm a realtor. Tenants have no incentive to make it easy to show. And they have no incentive to make it look nice for showings. Wait until the tenant is out, get rid of all cat evidence, clean, paint, stage appropriately.
That being said, price solves ALL problems. If you price it competitively it WILL sell. You need to lower the bait to where the fish are.
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Have you tried marketing the property as an investment rather than a primary residence? If you demonstrate that the property is profitable as a rental maybe an investor will buy it. Investors tend to be more able to look past the ugly couch and see the potential profitability of the property. Good luck and hope it works out for you.
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I know many are Millenials out there. Many are entitled, probably most of them are not on this forum. I know of one who stays at home all day, daddy gives him money, cannot hold a job despite a degree in accounting. He has trouble keeping a schedule and being told what to do.
Why the animosity towards me?
Any generation will have plenty of individual people whose choices we can question. If you'd like to list your age/generational affiliation I'd be happy to tell you stories of a person of your generation I know or know of who is entitled and/or lazy. ... but where will that get us? About the same place you are venting hatred for a whole cohort of people based on nothing but age, provoking an awful lot of animosity to no good end.
If that doesn't explain the animosity, try replacing millennial's with "swedish people" or "baptists" in your posts and see if re-reading them with that substitution explains why they would provoke animosity from both swedish people and non-swedish people.
With any house, the fair price is the price the market will pay. You cannot argue with the market or try to logically reason it into being willing to pay more for a house. For what it's worth, I am sorry for what you are feeling right now, having sunk a bunch of money into renovations having been convinced that they would result in you making a larger net profit (or smaller net loss) than you otherwise would have. It sucks to lose money, and it sucks to feel tricked. It sounds like your relator mislead you whether intentionally or through ignorance.
Others have given good advice: either cut the price a lot, or wait until the tenants leave and pay to have it professionally staged and photographed.
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A house a few blocks away sold for $50k more a few years previously and it's comparable.
That should be your clue. It's your house, the tenant and other things. Get rid of the tenant and hire a professional to stage your house, as someone had offered. Who are those people who bought that property a few blocks away? Are they a family, try to appeal to those people, they are your potential buyers. Check Zillow listing for that house, the photos might still be up, check out what sold that house, try to do the same. Use the same wording.
And leave millennials alone. You can't change the world, get used to it.
It's still the case about properties going up in price over time. My property is in prime school district, I bought it updated and flipped for $169k in 2012, the seller couldn't sell in 2010 and rented for 2 years until the market warmed up and the tenants wanted to leave (the rents in this area are great too). Now 6.5 year later it's worth more than $315k. The house next door with the same sqft-age, after the flip got sold for $315k. And they left the old windows and a crappy backyard, that the new owners refuse to do anything about (but that's my pet-peeve: home-owners who should never own a home, but rent instead) . And it got sold in the dead of winter within two weeks. All of our block was packed with cars on a snowy open house day. Before the flip, this dilapidated 3bd, 2.5ba got sold for $170k, the flipper had to put in an egress window to make it a 4bd house. That egress sticks out like a sore thumb, while in my property the 4th bd has 2 large full size windows on the other side of the basement.
So, my guess, you paid for your property too much.
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I call troll on this OP/thread. Nobody can possibly be this obtuse about RE.
-W
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@waltworks even stopped by! I was hoping for a more comprehensive takedown, but hey, the brevity speaks volumes in and of itself.
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Obviously everyone on here has been trigged by OP's microaggressions......
Relax folks I just hear a guy/gal venting that his house won't sell.
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Obviously everyone on here has been trigged by OP's microaggressions......
Relax folks I just hear a guy/gal venting that his house won't sell.
Exactly!
Let me clear up a few misconceptions. The 50k greater figure. That was not relative to this house now. That was a comp back in 2006 that sold for 50k greater than my similar property did when I bought it in 2009. The seller showed me some information when she thought about listing it then, and it dropped 50k when I bought it in 2009. I think due to the homebuyers credit, when I bought it, there was a spike. And I expected this. I figured once the credit ceased, values might drop 5 or 10% for 6 mos or so and resume the steady climb. I think the spike interrupted a continual decline that probably bottomed in 2012 or so. And once the credit disappeared, it was more than I anticipated. Almost freefall. I think there has been a return closer to what I paid for it. About 175k is what it will bring.
But it's a tough pill to swallow. I thought that a new kitchen with granite and new floors would make someone, or many someones, say "I have to have this place!" Most housing stock in the area is like mine, older. I think the reality is, and what HGTV won't tell you, is the market can only bear so much. I think if someone had to live in that area, which most don't, obviously, mine might move a little quicker over a comparable place with an older kitchen. But there are few comps. Similar places, which aren't even similar, have sold for 175k and 200k could be pushing it. I didn't think so with the new kitchen, but apparently so.
I will look into staging. The realtor mentioned that. I thought it was a stupid gimmick. Maybe not. I did want to sell and put ZERO more into the property.
There are some huge McMansions within 5 miles of this place. Not sure who and why someone would want to live there in them. Maybe 5 or 600k range. Realtor said be glad you don't own them. They are down about a third over the last decade.
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How low do you go? Where else on the East Coast can you have a house with a brand new kitchen and floors, 3 bedrooms and an office, and a 1 1/2 bay garage, and more, for under $200k? The area isn't horrible, either.
hmm - Having lived in several east coast states from MA down to SC - I'm going to say that what you are saying should basically be true from NOVA northward as long as you are within an hour or so of the Atlantic (for instance I'm not including Hagerstown MD or western, MA as "East Coast"). If you are south of Richmond or more northern but pretty westward, which I would guess you are based on your distance from a large city then, in my experience, there is a fair amount of housing stock under 200k.
As a millennial with a very old house, in an old neighborhood that is about half millennial families, I have lots of friends that own old homes. Not just in my town, but in several towns from Durham, NC and northwards.
But the key to the old homes is that their old features are played up, and the houses are generally in walking distance of amenities (restaurants, libraries, etc) or public transportation. And it still takes a bit to sell, because old house types are a special type of buyer.
Another thing I've seen with old houses with sloped floors is having a foundation expert check out the house before it is on the market and verify that the foundation is in good shape, just settled because the house is older. Then when the people looking at the house comment on the sloped floors, the real estate agent can put their mind at ease about foundation problems. Good Luck!
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...what HGTV won't tell you, is the market can only bear so much. I think...mine might move a little quicker over a comparable place with an older kitchen. But there are few comps. Similar places, which aren't even similar, have sold for 175k and 200k could be pushing it. I didn't think so with the new kitchen, but apparently so.
Yes, things to learn here:
1. HGTV is entertainment supported by advertisers who sell supplies for kitchen renos and similar things. It's not real estate education. No, they don't tell you what investors need to know. You are right!! You're better off reading real estate threads, noting remarks by experienced investors, getting to know professional investors in your area.
2. It's a real estate basic that fixtures above the typical level of a neighborhood don't usually make their money back, because no one will pay enough for them. This is learnable by the methods in 1, but you have learned it by experience. Costly, isn't it? (I've had expensive experiences too.)
I will look into staging. The realtor mentioned that. I thought it was a stupid gimmick. Maybe not. I did want to sell and put ZERO more into the property.
There are some huge McMansions within 5 miles of this place. Not sure who and why someone would want to live there in them. Maybe 5 or 600k range. Realtor said be glad you don't own them. They are down about a third over the last decade.
3. Let us know how the staging goes. I've never done it, but as far as being a gimmick - if it has become common and it works, it's not a gimmick, it's a state of the art tool that probably explains your house's inability to sell. Let us know what happens!
4. If even the McMansions are still down, maybe your area generally just isn't so hot in buyers' eyes. Maybe escaping with minimal losses is a win.
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Yes not a desirable area. Why? Not sure. Homes look nice nearby, mostly, but not exciting. Not really walking distance to a library, businesses are within a few miles. Better to drive, but could walk it.
I AM thinking of letting it go at a slight loss. Homebuyers credit I got could offset some of this, although I counted on it as money in the bank.
Fortunately an insurance check paid for these renovations...well, about 80% of it. Was hoping to get back my investment...
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Yes not a desirable area. Why? Not sure. Homes look nice nearby, mostly, but not exciting. Not really walking distance to a library, businesses are within a few miles. Better to drive, but could walk it.
I AM thinking of letting it go at a slight loss. Homebuyers credit I got could offset some of this, although I counted on it as money in the bank.
Fortunately an insurance check paid for these renovations...well, about 80% of it. Was hoping to get back my investment...
Why? The schools. People with financial capacity and kids are going to buy elsewhere. If the McMansions are in the same school district, those owners will never recover their investment.
You said up thread that you thought you could get $175k. If that is an accurate assessment, kick the tenant out, clean it up, and price it at $179,900. However, I would get the foundation inspected beforehand. If you don't, the buyer will. If it's bad, you may not be able to sell until that is repaired.
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I have never been one for cookie cutter houses, and I admire the craftsmanship available only in older houses. I might be a rare breed today???
"No one ever lost money underestimating the taste of the American public." is an old saying that has a fair bit of truth in it.
As for your house selling problem, you've been given plenty of good advice.
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It goes on the market once I get the tenant out. Got to get moving, I guess.
I bought it as a place to live but also as an investment. Once this place goes, I'll invest in the stock market and not another place.
Some folks just aren't meant to make money in real estate. It's just not the gains previous generations enjoyed.
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This might be useful to consider.
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I agree. Millennials are so entitled, wanting to buy a house that doesn’t suck at a competitive price.
Seriously. I'm a millenial. My first house sucked. We put in a ton of work on it to make it liveable. We also didn't make a profit when we sold it because the market was shit. We lost money.
But the house was worth it, because it was what we could afford. Our next house was perfect. 6 years and we still haven't done a lick of work on it. But it cost more than double what the first house cost.
If you sell me a shitty house, I want to pay a low price. If you want a high price, sell me a pristine house.
But this poster is an entitled troll across the forum, so really, not sure what my point in posting here is...
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My parents had a heck of a time trying to sell the house I grew up in, in Massachusetts. They tried in 2015 and couldn't, so they ended up renting it for 2 years and tried to sell it again afterwards to avoid capital gains taxes. It took almost all of 2018 to sell. It's an old house, good condition (no leaks, structure, hvac, or appliance problems) but with kind of a weird layout and not fully updated. It was not in a good school district either. Many people looked at it, never commented on the price as a problem, but also did not make offers. Finally someone fell in love with it and made 3 visits to it within a week followed by an offer. I guess it just needed the right person to see it.
It sounds like you have done more updates, including taking down a wall to make it look more modern, so this may not apply to you. Many people do want things to look a certain way and do not want to do a lot of work to get there when they buy a house. It's a big investment that they will be paying for most of their adult life. Having the renter gone and good staging/pictures should help get people in the door at least.
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It's really difficult for this forum to figure out exactly what factor is in play except that your price is too high or your tenants prevent buyers from seeing the potential. We can speculate about public schools, but that shouldn't account for any difference between when you bought and now.
But really, without knowing the town and the nearby areas, without seeing what your place looks like, we're just guessing.
It could be that the better paying jobs are in the more urban areas. It could be that millennials are either renting or having families (and wanting to be in a good district, or avoid lead paint). We don't know the major employers in the region. Could be anything for all we know.
Sorry to hear you won't make any money given all you've put in to improve the place. As a millennial, I disprove your theory (I'm breathing new life into a Victorian duplex that had both units rented out) but am not offended by it.
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We found it impossible to sell with a tenant. We sold fast once the tenant was gone.
+1
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Yes not a desirable area. Why? Not sure. Homes look nice nearby, mostly, but not exciting. Not really walking distance to a library, businesses are within a few miles. Better to drive, but could walk it.
I AM thinking of letting it go at a slight loss. Homebuyers credit I got could offset some of this, although I counted on it as money in the bank.
Fortunately an insurance check paid for these renovations...well, about 80% of it. Was hoping to get back my investment...
I can't remember how long you said you rented the house, but when you're calculating your profit/loss, keep in mind that you have to recapture your depreciation expense on your taxes.
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How does that work? Let's say you bought a house for $100000 and you depreciate 25k. Does that mean your basis is 75k?
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How does that work? Let's say you bought a house for $100000 and you depreciate 25k. Does that mean your basis is 75k?
More or less yes. So if you sell for 75k that's neither a gain or loss.
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I'm a tale end of the baby boomer. Your problem has nothing to do with millenials. I've bought and sold several houses, several many decades ago. The fundamentals really haven't changed all that much. Everyone is looking to get the best house they can for the least money. It is true that people now generally prefer houses where they don't have to do anything. That might be a bit more pronounced now with HGTV. Most people aren't mustacian. Most people have very little free time. Most people don't DIY. Why would these people prefer a house where they have to do a lot of work?
But school system and location, location, location have always been key. Even when we didn't have kids, we bought in the best districts we could because of resale. My kids are grown and our next house will be in a good school system.
Real estate is cyclic. It's the nature of the beast. If you don't live in an area with a lot of employment opportunities or other reasons to draw buyers, selling is going to be more challenging. If there is new construction around, it's automatically going to be more attractive, and you will be at a disadvantage. If you said how many bathrooms your house has, I missed it. If it's only got one bath or one and a half, that's a big disadvantage.
I think your best bet would be to drop the price, get rid of the tenants if feasible, clean it up as much as possible and get it on the market in the early spring. The market is dead as a doornail this time of year in the northeast, unless you are talking about 55+ housing developments.
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How low do you go? Where else on the East Coast can you have a house with a brand new kitchen and floors, 3 bedrooms and an office, and a 1 1/2 bay garage, and more, for under $200k? The area isn't horrible, either.
The reason that housing prices are low is because demand is low. Wages, local/regional/state econimic outlook, geography, weather, educational opportunities, availability of inventory, style of housing, and fairy dust all combine to drive prices. I'd wager that not much has changed with respect to any of these factors since you bought the house. What has changed is your expectation. Sorry, a single person's expectation is not a market driver.
Yes not a desirable area. Why? Not sure. Homes look nice nearby, mostly, but not exciting. Not really walking distance to a library, businesses are within a few miles. Better to drive, but could walk it.
I AM thinking of letting it go at a slight loss. Homebuyers credit I got could offset some of this, although I counted on it as money in the bank.
Fortunately an insurance check paid for these renovations...well, about 80% of it. Was hoping to get back my investment...
Wait! You got the credit, and insurance money. Perhaps if you calculated what you actually have into the property, you'd discover a better outcome than you're complaining about. You seem butt-hurt that the straw you spun didn't turn to gold. Sounds just like the entitlement you accuse milennials of.
I bought my first house in a second-tier area, because that's what I could afford. I put a lot of sweat equity into it. It was also a rental. I received no extra tax breaks, and no insurance windfall. When I sold it eight years later, I barely broke even.
But I learned a ton and that education proved priceless. I am FIRE now because of excellent real estate gains on subsequent properties in much more expensive markets. I only had the confidence to enter them because of what I learned on that first house.
You can learn from this experience and profit from that knowledge, but what you cannot do on this forum is act entitled, blame others, and generally exhibit troll-ish tendencies on multiple threads. Those kind of shenanigans are not rewarded here in mustache land. Without a substantial change of attitude on your part, you simply won't last here. Now, is that an accurate barometer of how well you're going to succeed in life your quest for FIRE? Can't say for sure, but I wouldn't bet against it.
[Dicey tips hat to @waltworks as she exits the thread.]
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My parents and their friends recently put their houses on the market, and it was quite shocking how bad their listing looked on Zillow and other online search tools used by those Millennials*. In addition to the realtor-taken crappy pictures, both also seriously understated the top-line square footage relative to other houses in the market by not counting finished basement area when other in the market counted it. Since MrBojangles has only gotten a handful of showings in many months, I'd suggest taking a close look at how the house's listing compares to other in the market.
*Get off my lawn you damn kids!
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2 things:
YES, school district is a critical factor in home purchasing. This is working against you
1.5-2.0 hrs to the nearest large city? You expect someone to commute that long to their city job?
Does your sale price reflect these two realities?
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How does that work? Let's say you bought a house for $100000 and you depreciate 25k. Does that mean your basis is 75k?
More or less yes. So if you sell for 75k that's neither a gain or loss.
Wow! I did not know that. Psychologically, I want to get 200k which means I make back my original coat plus realtors fees. Doesn't look like that's going to happen! BUT, is it actually better to let it go for a bit less than 185k since I've rented it out for about 5 years?
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That depends on your personal tax situation. Are you planning on rolling the money over to another rental? How much are you going to make this year? Etc. Just figure it in to your cost/benefit analysis.
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How low do you go? Where else on the East Coast can you have a house with a brand new kitchen and floors, 3 bedrooms and an office, and a 1 1/2 bay garage, and more, for under $200k? The area isn't horrible, either.
The reason that housing prices are low is because demand is low. Wages, local/regional/state econimic outlook, geography, weather, educational opportunities, availability of inventory, style of housing, and fairy dust all combine to drive prices. I'd wager that not much has changed with respect to any of these factors since you bought the house. What has changed is your expectation. Sorry, a single person's expectation is not a market driver.
Yes not a desirable area. Why? Not sure. Homes look nice nearby, mostly, but not exciting. Not really walking distance to a library, businesses are within a few miles. Better to drive, but could walk it.
I AM thinking of letting it go at a slight loss. Homebuyers credit I got could offset some of this, although I counted on it as money in the bank.
Fortunately an insurance check paid for these renovations...well, about 80% of it. Was hoping to get back my investment...
Wait! You got the credit, and insurance money. Perhaps if you calculated what you actually have into the property, you'd discover a better outcome than you're complaining about. You seem butt-hurt that the straw you spun didn't turn to gold. Sounds just like the entitlement you accuse milennials of.
I bought my first house in a second-tier area, because that's what I could afford. I put a lot of sweat equity into it. It was also a rental. I received no extra tax breaks, and no insurance windfall. When I sold it eight years later, I barely broke even.
But I learned a ton and that education proved priceless. I am FIRE now because of excellent real estate gains on subsequent properties in much more expensive markets. I only had the confidence to enter them because of what I learned on that first house.
You can learn from this experience and profit from that knowledge, but what you cannot do on this forum is act entitled, blame others, and generally exhibit troll-ish tendencies on multiple threads. Those kind of shenanigans are not rewarded here in mustache land. Without a substantial change of attitude on your part, you simply won't last here. Now, is that an accurate barometer of how well you're going to succeed in life your quest for FIRE? Can't say for sure, but I wouldn't bet against it.
[Dicey tips hat to @waltworks as she exits the thread.]
I learned a lot from this property. At least I made the mistake on a lower prices property and l know how to proceed with other ones and can say from this mistake, never again! My home now is what my wife insisted on and it is in a top notch school system in a neighborhood. I wasn't aware folks really want neighbors, but little did I know... In fact, my biggest worry with my residence is that someday the schools may not be as highly rated, and the value will go down.
I don't want to seem stereotypical, but the Millenials and high school kids in my neighborhood seem very entitled. I am not. I apologize if I offended anyone, but I had the attitude that I grew up with nothing, which I basically did, and I'm getting this degree to make a killing. Doesn't matter what my degree is, just shut up and pay me a lot. Didn't work that way! I am still paying for that massive mistake. The take home message is study engineering. Had I done so I could have a very short commute with a much better salary.
Those who knew me in college asked many times what I would do with my degree. That should have been a sign.
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My parents and their friends recently put their houses on the market, and it was quite shocking how bad their listing looked on Zillow and other online search tools used by those Millennials*. In addition to the realtor-taken crappy pictures, both also seriously understated the top-line square footage relative to other houses in the market by not counting finished basement area when other in the market counted it. Since MrBojangles has only gotten a handful of showings in many months, I'd suggest taking a close look at how the house's listing compares to other in the market.
*Get off my lawn you damn kids!
One HUGE thing going against me, I think, is assessed value of 50% is what taxes are based on. My listing had taxes at 100%, so double actual taxes. This will be corrected when I repost. I surely hope folks saw the high taxes and moved on. Do they? Or do they look at a house first and then decide based on taxes and other factors. My realtor should have caught this egregious error.
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I wasn't aware folks really want neighbors, but little did I know... In fact, my biggest worry with my residence is that someday the schools may not be as highly rated, and the value will go down.
I don't want to seem stereotypical, but the Millenials and high school kids in my neighborhood seem very entitled. I am not. I apologize if I offended anyone, but I had the attitude that I grew up with nothing, which I basically did, and I'm getting this degree to make a killing. Doesn't matter what my degree is, just shut up and pay me a lot. Didn't work that way! I am still paying for that massive mistake. The take home message is study engineering. Had I done so I could have a very short commute with a much better salary.
Those who knew me in college asked many times what I would do with my degree. That should have been a sign.
@Mr. Bojangles, I hope I'm not being offensive here, but it strikes me that there a meta-lesson here that you could learn to your advantage. It seems that you normally overlook situational elements that relate to common social responses. Your path of logic has many aspects that diverge from the ordinary person's outlook, without you realizing it. Diverging from the common path is great if you turn it to your advantage, but since you often don't recognize the divergence on your own, you make mistakes that most people wouldn't. I think the thing to recognize is that this is a probably a global issue in your life, not a situational rarity, and that you should therefore attempt to account for it when making decisions.
For example, assuming that your wife's approach is more "normal" - more alert to standard social cues - then including her input your process would be very wise. So, congratulations on buying your own new home in an area that she liked. Similarly, consider reading extensively about what other people find to be effective in investment situations, and include an extra procedure to get their opinion about the parts you don't understand. In other words, before you spend money, don't just assume you found a good deal - assume it's a bad deal where other people know the reason it's bad, but you don't, and ask why it's bad. I think that doing this will reduce the number of costly surprises that you experience in the future.
I have experienced similar things, so please don't be offended. Anyway, good luck.
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How low do you go? Where else on the East Coast can you have a house with a brand new kitchen and floors, 3 bedrooms and an office, and a 1 1/2 bay garage, and more, for under $200k? The area isn't horrible, either.
The reason that housing prices are low is because demand is low. Wages, local/regional/state econimic outlook, geography, weather, educational opportunities, availability of inventory, style of housing, and fairy dust all combine to drive prices. I'd wager that not much has changed with respect to any of these factors since you bought the house. What has changed is your expectation. Sorry, a single person's expectation is not a market driver.
Yes not a desirable area. Why? Not sure. Homes look nice nearby, mostly, but not exciting. Not really walking distance to a library, businesses are within a few miles. Better to drive, but could walk it.
I AM thinking of letting it go at a slight loss. Homebuyers credit I got could offset some of this, although I counted on it as money in the bank.
Fortunately an insurance check paid for these renovations...well, about 80% of it. Was hoping to get back my investment...
Wait! You got the credit, and insurance money. Perhaps if you calculated what you actually have into the property, you'd discover a better outcome than you're complaining about. You seem butt-hurt that the straw you spun didn't turn to gold. Sounds just like the entitlement you accuse milennials of.
I bought my first house in a second-tier area, because that's what I could afford. I put a lot of sweat equity into it. It was also a rental. I received no extra tax breaks, and no insurance windfall. When I sold it eight years later, I barely broke even.
But I learned a ton and that education proved priceless. I am FIRE now because of excellent real estate gains on subsequent properties in much more expensive markets. I only had the confidence to enter them because of what I learned on that first house.
You can learn from this experience and profit from that knowledge, but what you cannot do on this forum is act entitled, blame others, and generally exhibit troll-ish tendencies on multiple threads. Those kind of shenanigans are not rewarded here in mustache land. Without a substantial change of attitude on your part, you simply won't last here. Now, is that an accurate barometer of how well you're going to succeed in life your quest for FIRE? Can't say for sure, but I wouldn't bet against it.
[Dicey tips hat to @waltworks as she exits the thread.]
I learned a lot from this property. At least I made the mistake on a lower prices property and l know how to proceed with other ones and can say from this mistake, never again! My home now is what my wife insisted on and it is in a top notch school system in a neighborhood. I wasn't aware folks really want neighbors, but little did I know... In fact, my biggest worry with my residence is that someday the schools may not be as highly rated, and the value will go down.
I don't want to seem stereotypical, but the Millenials and high school kids in my neighborhood seem very entitled. I am not. I apologize if I offended anyone, but I had the attitude that I grew up with nothing, which I basically did, and I'm getting this degree to make a killing. Doesn't matter what my degree is, just shut up and pay me a lot. Didn't work that way! I am still paying for that massive mistake. The take home message is study engineering. Had I done so I could have a very short commute with a much better salary.
Those who knew me in college asked many times what I would do with my degree. That should have been a sign.
Your posts throughout threads have made you seem extremely entitled. This can't possible be a millennial/high school kid problem (and presumably also college kid- as most millenials are now done with college; aging 22-37). I think people, or perhaps Americans have entitlement issues.
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Good point @i'm a red panda.
It's about time a new name emerged for the next generation of folks born in the late 1990s and 21st century. I remember being college and people still using "generation y" as a placeholder but once millennial started showing up it rapidly gained widespread adoption.
I haven't heard a good name for the post-millennial/generation z folks yet, but hopefully something will pop up soon so that people will be able to continue to complain about kids-these-days. ;-)
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GenX here, cynically hating things in general.
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Good point @i'm a red panda.
It's about time a new name emerged for the next generation of folks born in the late 1990s and 21st century. I remember being college and people still using "generation y" as a placeholder but once millennial started showing up it rapidly gained widespread adoption.
I haven't heard a good name for the post-millennial/generation z folks yet, but hopefully something will pop up soon so that people will be able to continue to complain about kids-these-days. ;-)
Gen Alpha is what I've heard for post gen Z.
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Good point @i'm a red panda.
It's about time a new name emerged for the next generation of folks born in the late 1990s and 21st century. I remember being college and people still using "generation y" as a placeholder but once millennial started showing up it rapidly gained widespread adoption.
I haven't heard a good name for the post-millennial/generation z folks yet, but hopefully something will pop up soon so that people will be able to continue to complain about kids-these-days. ;-)
Gen Alpha is what I've heard for post gen Z.
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My sister is redoing an old house in New England right now. Design is everything. Your description of granite counters and oak floors worries me. Granite is kind of out right now. And I am not sure that Victorians used oak. Good luck whatever you decide to do.
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Out of curiosity, what is in now for counters now that granite is out?
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Out of curiosity, what is in now for counters now that granite is out?
Quartz mainly. Other options such as marble, concrete or butcher block are out there, but in much smaller percentages. They're all expensive, whether up front or in higher labor costs and effort to maintain.
And they call quartz "natural stone", but it's man made.
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Out of curiosity, what is in now for counters now that granite is out?
Quartz mainly. Other options such as marble, concrete or butcher block are out there, but in much smaller percentages. They're all expensive, whether up front or in higher labor costs and effort to maintain.
And they call quartz "natural stone", but it's man made.
Yep, I was gonna say quartz, butcher block, or concrete. I can definitely see the appeal of quartz over granite, particularly since granite needs sealing and all that. And you can get a wider range of colors in quartz. It's like 90+% natural material suspended as a composite, right? I think the environmental impact is supposed to be lower since it's not slab based.
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Thanks! Looked up some pictures of quartz countertops and I'm guessing I've been seeing those for years in passing and assuming they were granite. SMH at the though low maintenance wouldn't be a top priority for most people when it came to picking kitchen counters.
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Out of curiosity, what is in now for counters now that granite is out?
Quartz mainly. Other options such as marble, concrete or butcher block are out there, but in much smaller percentages. They're all expensive, whether up front or in higher labor costs and effort to maintain.
And they call quartz "natural stone", but it's man made.
Yep, I was gonna say quartz, butcher block, or concrete. I can definitely see the appeal of quartz over granite, particularly since granite needs sealing and all that. And you can get a wider range of colors in quartz. It's like 90+% natural material suspended as a composite, right? I think the environmental impact is supposed to be lower since it's not slab based.
Not only that, but I feel like every home that I've seen granite, it seems like they pick the gaudiest mismatched granite. I'm more of a butcher block/ concrete person myself. At least with a solid color you can make it work with different backsplash.
But more so, all the house listings I see keep making a point of "granite countertops". It's not a big appeal to me. I think my parents' generation really wanted to have something better than the cheap particle board/ plastic counter tops that went into every cookie-cutter house in the 80-90's. But with modern quartz and concrete techniques you can get a high quality counter top with custom colors for far less which means people aren't going to pay a premium for granite. If buyers don't care whether it's concrete or granite, it means you're not going to get a price bump for putting it in.
Personally I'm house shopping right now. The trends I'm seeing:
1. Any house over 2,000 sqft and 20 years old or older, have to give a pretty steep price cut. (The area I'm looking at has to sell large houses about $20-30/sqft cheaper.) The next generation just doesn't have a need for a 4-5 bedroom house. Taking on that much house is a burden, not a benefit. And even spendy people can be a bit anxious about buying too much house.
2. People aren't into remodeling. And we're turning into a buyer's market right now too. So the number of flippers out there is way down. A house that needs a kitchen/bathroom remodel will have to discount heavier than the price of the remodel.
3. Natural lighting is a huge plus. It seems that homes built in the 70-90's have little to no natural light. The much older homes and newer homes have much more. Along with this is open floor plans. Opening up a ceiling port or putting a bigger window out front might really help brighten up the house.
4. People don't want huge yards. (Though personally I'd like something, so I'm avoiding the new constructions with 0 backyard. The whole point of a house would be to have a garden/ other personal greenspace desires)
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Millennial here, and I'm not afraid to work on my house, in fact I do it constantly.
I would be afraid of buying a house with a 4 out of 10 school rating. I would rather pay an extra 50-100k for a house in a great school district because that's a bargain compared to private school. This is often a top consideration for any young family.
Other location considerations that many millennials are looking for: walkability, and proximity to jobs, culture, and good food to name a few.
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My opinion? The recent tax reform.
The 24k standard deduction pretty much wipes out the advantage of having a mortgage. Folks are starting to file their taxes, they are NOT seeing their tax return increase as they input the mortgage interest. The standard deduction still gets them more back.
All other things equal this is going to reduce demand.
Disclosure: *Not an economist*
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Tax reform makes little difference for most people buying $300k houses. The deductions are similar, they are just not itemized.
The market segment tax reform impacted was the high end. The interest deduction is limited to a mortgage amount of $750,000. The SALT deduction limit is huge for states with high income and/or property taxes. The SALT deduction starts making an impact at a much lower level in high income and property tax states. If you have a $400k house, are paying 2.5 percent in property taxes and $10k in state income taxes, your taxable income just rose by $10k. It goes up from there.
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Tax reform makes little difference for most people buying $300k houses. The deductions are similar, they are just not itemized.
The market segment tax reform impacted was the high end. The interest deduction is limited to a mortgage amount of $750,000. The SALT deduction limit is huge for states with high income and/or property taxes. The SALT deduction starts making an impact at a much lower level in high income and property tax states. If you have a $400k house, are paying 2.5 percent in property taxes and $10k in state income taxes, your taxable income just rose by $10k. It goes up from there.
How do you figure this?
I pay 10k ++ in interest and property tax, I still take the standard deduction. I would need to pay more then double that to itemize and thus get any benny from paying all that mortgage interest.
Therefore there is zero taxable benefit from paying mortgage interest on most houses less then 500k. Before when you paid 5k of interest you were able to save a few bucks. For as long as I can remember buying a house was always a way to shield from taxation. It now no longer is.
Ok I think I hear what you are saying rereading it. In most situations the net tax paid is the same. Just standard versus itemized. Yes I agree with that. But when Joe tax payer files 2018 taxes, puts in his mortgage interest and his return does not move that is something he pays attention to. Buying that house in 2019 wont save him any more on tax, he does not buy a house in 2019. Real estate no longer has a tax benny, thus making it less attractive in aggregate. Thus reducing demand and prices.
Its one of those things when you read about it your like oh ok, that's fine. But when it comes time to file and you see the direct impact on your own bottom line it gets your attention in a hurry!
*full disclosure: I totally just filed and was like, oh wow this IS different!
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The heat of the market depends on the location. Are you in Tempe, Chandler, or Gilbert Arizona? Houses in decent condition and properly priced sell within a couple of days if they are under $330k. The market heated up the second week in January. People are pushing $5-$10k above the last comp and getting it IF the house has the decor and features buyers want. The market depends on employment and interest rate. Taxes in this market are of no importance.
Silicon Valley where I live? Sales slowed last Fall when interest rates shot up. They have improved a bit, especially under $1.2M, but high prices and the consequences of tax reform are having an impact.