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Real Estate news

2007-10-31 18:51:49.247772+00 by Dan Lyke 8 comments

I got in the car to run an errand today, and today's Talk of the Nation, on selling your house, had a couple of real estate professionals talking about kitchen and bathroom upgrades and cash back schemes and such. As the market softens a bit I can see myself as a potential buyer, and allow me to offer some advice: I can price out how much granite costs per square foot, I've read the various reliability studies on appliances and I know that the high end appliances are often less reliable and less efficient than the lower end ones, and most of the customizations in kitchens and bathrooms are as much personal taste as a paint job. So that $25k you spent retiling the bathroom? Don't care.

Every hundred bucks extra I spend on the house is a buck a year extra I'll be spending on property taxes, and a buck I'll be spending on transfer taxes when I buy the house. If that's for infrastructure, great. If you're trying to pass along the tacky green granite tile job in the bathroom? No go. And it may have been a good idea two years ago to "give away" a vacation along with the house so that buyers could tack the leisure spending on to their home loan, but that's why I wasn't buying then.

Federal funds rate down another quarter to 4.5%.

In a brief statement explaining the decision, Federal Reserve Chairman Ben Bernanke and his colleagues said that the central bank now judges that "the upside risks to inflation roughly balance the downside risks to growth."

Yep, that's a delicate knife edge you're walkin' there Ben.

[ related topics: Economics Real Estate ]

comments in ascending chronological order (reverse):

#Comment Re: made: 2007-10-31 20:21:02.152668+00 by: Dan Lyke [edit history]

Gold clears $800/oz, highest since 1980, and oil's at $94/barrel. Think the inflation's already happened. Good thing the dollar's no longer worth anything, otherwise our forein policy might actually be costing the next generation something, hey?

#Comment Re: made: 2007-11-01 11:08:28.310089+00 by: meuon

Re: value of a house: I'm getting much more interested in things like: Oh, that's a 100+ year roofing material and siding? - Americans tend to make too much of their homes out of temporary materials that look nice, for 10-20 years. Add in some features like: Nice all copper solar water heating system... and Oh, that Fridge/Freezer costs about $30/year to operate?

Part of it's being green, some out of 'frugal, but I'd like to think a lot of it is just plain smart.

#Comment Re: made: 2007-11-01 15:50:07.101022+00 by: petronius

The economy might not cost our grandchildren anything. According to this, the Federal deficit has dropped $250 billion dollars in the last 5 years.

As to housing prices, it strikes me that unless one is planning to flip their house in the near term, remodeling as investment isn't that good an idea. My place needs a lot of work, and getting it done will increase the value of my home, but I mostly want to get the work done to make my place more pleasent for me. Last year I had to replace my furnace because it finally gave up the ghost, and was shocked to discover that a modern unit made my home toastier in the winter and used less electricity. I should have spent the money years ago. If I ever decide to get granite countertops I will do so because I think they are pretty, not because they may or may not make the place more sellable.

#Comment Re: made: 2007-11-01 16:52:46.571412+00 by: Dan Lyke

Meuon, I've seen a couple of buildings done with attention to long-term value. Most of 'em are well out of my price range. On the other hand, there are, as petronius points out, a lot of decisions that can easily be made on economic grounds.

Petronius, one of the strongest messages out of "Rich Dad, Poor Dad" that I got was that a home isn't an investment, it's an expense. Which is kind of odd for the book that's credited in helping spur on the real estate boom, but it's not that a house or real estate can't be a good investment, it's that a home has enough other emotional baggage tied up in it that it needs to be treated as money that's going to your enjoyment, not spent because you might be able to con someone else into thinking the value of the change is more than the change cost.

If you want turrets on the roof and moats in the yard go for it, just make sure they come the expense part of your budget, not the investment part. What's gone wrong is this "your home is your biggest investment" rhetoric, which has people doing absolutely silly things to their homes because "that's what the market wants".

#Comment Re: made: 2007-11-01 16:57:51.9306+00 by: Dan Lyke

NY Attorney General claims WaMu and eAppraiseIT collaborated on overhyping appraisals:

He also released e-mails that he said show executives were aware they were violating federal regulations. The lawsuit filed in state Supreme Court in Manhattan seeks to stop the practice, recover profits and assess penalties.

"These blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market," Cuomo said in a statement. "By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion."

#Comment Re: made: 2007-11-01 19:07:41.634226+00 by: jeff

Lowering interest rates even further and pumping $41B into the banking system (today) will not cure a fundamentally non-scalable housing system (urban sprawl). Sorry, investors.

#Comment Re: made: 2007-11-01 19:46:33.877405+00 by: meuon

Re: HVAC, I think a better HVAC system might pay for itself quickly, and it's on my research list. But it's hard to get straight answers from HVAC people, they are often one step below car mechanics on Rossville Blvd (where they weld two wrecks together and apply for a new title).

#Comment Re: made: 2007-11-01 23:43:43.251219+00 by: Dan Lyke

Petronius, to your point about the shrinking deficit: Thanks for pointing that out, it's good for me to keep some perspective on the overall numbers. And given the undercounted inflation we've got going on, that's almost like saving now!

Jeff, the only thing that's going to stop urban sprawl is energy costs... Something to think about for investment targets.

Meuon, I'm having an overall crisis of consumerism in trying to figure out what's reasonable to purchase. I've run into too many places where I know more than the reviewers, where price and quality are unlinked, and it's not helped by my overall mistrust and cynicism about the world.