I have a couple of questions for the mustachian real estate pros. I bought my house about five years ago and the value has declined pretty steadily(about 12% during that time). I believe that the main factor causing the decline is that my neighborhood is getting and will continue to get worse.
So here are the numbers:
Mortgage balance is $157,000 at 4.875%
Payment is $1301 PITI
Comps for our house range from $145,000 at the low end to $168,000 at the high end (this data comes from 2 realtors, zillow and Redfin.com). The low range are houses that are much more outdated and with less desirable features than ours. The high range has multiple of the following; hardwood floors, big open upgraded kitchen, deck, finished basement, garage or more square footage. Our house has an AWESOME kitchen, a nice deck with a front and back yard, a detached garage and a fireplace.
I’ve met with two realtors who gave somewhat conflicting opinions.
The first told us to hold out for at least a year. He said that 2015 looks to be a good year for real estate, especially in Philadelphia. He said the odds of our home value continuing to decline, and then declining MORE than our principal payments on our mortgage are very low. After a year plus, we will have more equity, be able to get a higher selling price (even if it’s only slightly higher) and will have more in savings.
The second said that while real estate in Philadelphia is probably going to have a good 2015, our neighborhood probably will not participate. He said that previously bad areas in Philadelphia that are being gentrified are driving prices up and pricing out the residents of those areas. They’re moving to our neighborhood and surrounding neighborhoods and driving the price down. He said that we should sell now, even if we’re slightly underwater to avoid further losses. I tend to agree with this realtor.
If anyone with some expertise in the Philadelphia real estate market would like to offer an opinion as well, let me know and I will e-mail you more specifics.
The questions are as follows:
1. In the words of The Clash, should I stay or should I go? I’m leaning VERY heavily towards go. Current plan is to put the home up for sale this spring or summer
2. Should I make any improvements? I’m kicking around the idea of redoing our flooring (our carpets are really old and look like they’re commercial carpets. No dirty or too worn but REALLY ugly), as well as redoing one of the upstairs bedrooms (the walls are a weird textured finish, almost like stucco and the previous owner used it as an office and used what seems like thousands of anchors to put shelves EVERYWHERE). I’m worried that without those improvements we won’t be able to ask a price in the higher range, as we won’t compete favorably with the other houses in that range. However a lot of people are telling me not to do a thing, as I won’t be able to recoup the cost. I will be doing all the work myself (with help from some contractor friends and family) so that will cut costs by a ton.
If you need any other info or pictures, let me know. Thanks in advance for all your opinions and advice!!!
