Real estate-- calling the top.

[Nords]

It's time once again for my semi-annual prediction that real estate prices just can't possibly get any higher, and this time I really mean it.

We went to an open house last week for 94-1022 Upai Place. It's in a decent neighborhood with a good elementary school and OK higher schools, a bedroom community not too far from town and not too bad for traffic. (But not too great, either.) The area's not too noisy. 3BR 2BA, 1800 sq ft on a 5800 sq ft lot (around here that means "big lot"), a garage instead of a carport, tile roof, central A/C (~$200/month electric bills), cathedral ceilings. Its assessed value is $425K with $1400/year property taxes.

Inside it's like a museum. Both toilets are dated 1978. The water heater, what's left of it, is original (?!?). The kitchen and both baths are original flooring, original Corian, original porcelain, even the original cabinet doors & mirrors (with a two-inch band of corrosion along the bottoms of the mirrors). The stove & fridge are newer but the dishwasher is (*shudder*) original. The rooms have their original light fixtures. The carpet has been updated but not this millennium.

The house needs painting. The siding's fiberboard is crumbling at the bottom edges. Moldings are chipped. Drywall corner beads are exposed & rusting. Paint had been applied directly over some of the receptacle covers. "Drapes" are original and the blinds haven't been cleaned since Reagan left office. Dust and dirt fill the corners. No one had made even the faintest beginnings of an attempt to clean up for the open house, let alone spend time primping for curb appeal. The popcorn ceilings have collected dust along the lines of the roof trusses to give it a brown & white striped look.

No one put any effort into getting the place ready for sale, but they don't have to care. It's listed at $615K. Click on that link quickly because it won't have a second open house!

 

[Martha]

Don't call the top yet. We got out in great shape on several real estate deals this year-land in Florida and two apartment buildings in Arizona. But we still have to sell out two condo developments in Arizona and sell out the condo hotel in Florida. Markets are still looking fine in both places.

 

[Michael]

There is no top. Nationally, real estate prices have not fallen since WWII. Locally, over heated areas will fall. Probably next summer with the stock market, so that the politicians can make the economy hum the following 2 years for the elections.

 

[MasterBlaster]

The value is all tied up in the land.

I had dinner about 6 years ago with a real estate apraiser. He told me a good formula for ballparking what the land is worth:  From the asking price subtract the Structure value. You can ballpark the structure value
by taking the square footage of the house multiplied  by $50 (construction costs per square foot) to get an approximate construction cost. Then lower that value by 1 percent for each year the structure is old. So if the house was built in 1978 I calculate that the structure is worth just over $66k (1810*$50*((2005-1978)/100)). (You can pick your own number for construction costs if you like)

Therefore at $615k you are buying a $549k lot with a $66k house structure. Or another way to look at is is 90 percent land (appx) and 10 percent structure. Therefore the quality of the chipped tile and lack of paint on the structure are really not strong factors in determing the final price.

 

[tryan]

Top? Maybe ... things have certainly leveled off over the last 6 months north of Boston. But there's still lots of time. I figure the bottom will be achieved in about 1/2 the time the run-up took. So this "run" was 1995 - 2005 (and counting) a bottom is at least 5 years away.

 

[cute fuzzy bunny]

I'm with ya. Its nuts. Gander at this beauty I stopped to check out a few weeks ago:
http://tinyurl.com/avvub

Nice newer home, good size, couple of storage buildings out back, an acre most of which is packed dirt. Rest of the neighborhood is 50 year old double-wides, knocker downers, car junkyards and overgrown yards. High tension powerlines a street over. Grain processing plant within view. Bad schools, gang activity in the area, biker bar you could hit with a rock from the front yard.

$620K.

Floored me.

Modified to shorten URL becasue () is a PITA and won't do it himself.

 

[cube_rat]

Some of you are in different parts of the country. The SF Bay Area is one of the best places to live but the worst in terms of cost of living. Check out this house in a "regentrified" neighborhood of Daly City:

http://www.craigslist.org/pen/rfs/106871053.html

I'm so glad to see inventory staying on the market longer. The madness needs to stop.

 

[LovesLife]

Holy crap. Sure wish I could pick up my house and move it to a similar area in CA then sell.

LL

 

[Martha]

Another part of the country, northern Minnesota: http://tinyurl.com/a3yw3

House isn't that attractive from the outside, but the view is tremendous. I know someone that lives in the neighborhood. The property is walking distance to nice cross country and walking trails.

 

[TromboneAl]

WASHINGTON - Sales of new U.S. homes rose more slowly than expected in September, while the number of new houses on the market hit a record and median prices fell, according to a government report Thursday that could signal cooling in the housing boom.

The Commerce Department said new single-family home sales rose 2.1 percent last month to a seasonally adjusted annual rate of 1.222 million units from 1.197 million unit pace in August — a sharp downward revision. New home sales were revised lower for June and July as well.

http://www.msnbc.msn.com/id/9838303

 

[Cut-Throat]

Martha,

The Minneapolis paper the last few weeks have been covering the insane real esate prices on the North Shore. They highlighted an 80 acred parcel in Two Harbors. Sold for 19K in 2000. It has sold 3 times since then. Currently on the market for $700K. Not lakeshore, but a great Lake view. I know my 40 acres down here near the cities has not appreciated that much.

 

[Sheryl]

Here's what you can get in Bellingham WA for about the same price range that other folks have posted. 

http://tinyurl.com/b7vjd

 

[Mr._johngalt]

Here's what you can get in Bellingham WA for about the same price range that other folks have posted. 

http://tinyurl.com/b7vjd

Nice! I paid $68,000 for our 1 BR/1Bath cottage in 2001. 100
feet of water frontage. Good neighbors, spectacular views,
and just the right size for a couple. One of my "fallback"
plans is to sell and go WAY OUT in the country. Probably won't,
but I could.

JG

 

[JPatrick]

Here's what you can get in Bellingham WA for about the same price range that other folks have posted. 

http://tinyurl.com/b7vjd

Nice house- - -Nice taxes $1140
Move that house to my neck of the woods and you'll pony up about $18,850  

 

[Mr._johngalt]

Honestly............if I had any excess cash I would buy land.

JG

 

[Mr._johngalt]

The value is all tied up in the land.

I had dinner about 6 years ago with a real estate apraiser. He told me a good formula for ballparking what the land is worth:  From the asking price subtract the Structure value. You can ballpark the structure value
by taking the square footage of the house multiplied  by $50 (construction costs per square foot) to get an approximate construction cost. Then lower that value by 1 percent for each year the structure is old. So if the house was built in 1978 I calculate that the structure is worth just over $66k (1810*$50*((2005-1978)/100)). (You can pick your own number for construction costs if you like)

Therefore at $615k you are buying a $549k lot with a $66k house structure. Or another way to look at is is 90 percent land (appx) and 10 percent structure. Therefore the quality of the chipped tile and lack of paint on the structure are really not strong factors in determing the final price.

Agree with this approach, but the
$50 per SF is too low.
I use it sometimes,
but even out here in the sticks I think it is inadequate.

JG

 

[wabmester]

We went to an open house last week for 94-1022 Upai Place.

That doesn't look too bubbly to me.   At least compared to places I looked at in Newport Coast, CA.   $1M+ for a condo.  $2M+ for a crappy house.   These are not waterfront, and most of them don't even have water views.   Just crazy prices.

Newport Coast

 

[Michael]

...median prices fell...

That's just monthly fluctuation.  The price is still up from the start of the year (185 to 215).  Home prices go up in a zig zag fashion over the short term. Odds are that they will finish the year higher than the 185 start, and next year they will again finish higher yet.

http://www.realestateabc.com/graphs/natlmedian.htm

 

[Gone4Good]

Great article on one of the worlds savviest real estate investors:

http://www.fortune.com/fortune/investing/articles/0,15114,1117911,00.html

Best quote:

"I feel totally safe playing polo on a field full of pros," says the bronzed 58-year-old. "But when amateurs are all over the field, someone can get killed. They have more guts than brains. They charge after every ball and don't know when to hold back." It's the same with the U.S. real estate market right now: "There's too much money chasing too few good deals, with too much debt and too few brains." The amateurs are going to get trampled, he explains, taking seasoned horsemen, who should get off the turf, down with them. Says Barrack: "That's why I'm getting out."

 

[Sheryl]

That curve appears to be "asymptotic to infinity."  That is a goofy, geeky phrase my dad and I used to use to refer to anything that was being carried to an absurd extreme....

 

[cute fuzzy bunny]

Modified to shorten URL becasue () is a PITA and won't do it himself.

Had a baby in my lap trying to dial uzbekistan on my cell phone. Typing one handed while trying to retrieve the phone and keep him from simultaneously sweeping my cup of coffee off the desk and/or grabbing the cats tail.

Plus I know you'll do it for me

Used to be and maybe still is a show, I think it was on HGTV called "What you get for the money". Each show picked a price point and then showed you a handful of homes around the country. Amazing the differential. A 600 square foot place in manhattan in a bad but improving neighborhood or a 4000 square foot 6 bedroom 5 bath in some podunk state in the southeast.

Given this comparison, I'd probably take the fixer upper in hawaii rather than the nice house on a big lot in a bad neighborhood in Yuba City...

 

[justin]

...4000 square foot 6 bedroom 5 bath in some podunk state in the southeast.

Yep. I know of plenty of houses like this here in NC. $500,000 or so will get you one of these monsters right on the golf course. At what point does a house change into a mansion... 5000 sf? 6000 sf?

 

[SteveR]

Yep.  I know of plenty of houses like this here in NC.  $500,000 or so will get you one of these monsters right on the golf course.  At what point does a house change into a mansion...  5000 sf?  6000 sf?

Sounds like another poll in the making.

I am not sure I would call a 6000 sf house a mansion. It all depends on if a bunch of it comes from a finished basement or not. There are some houses near here that are 10,000 sf. They are in the $2+M area. One I saw the other day is 17,000 sf and is listed as a "Mansion". The going price for it with a 7 car garage, pool, tennis courts and 2 acres of land is only $4M.

 

[Nords]

At what point does a house change into a mansion...  5000 sf?  6000 sf?

I think below 1500 sq ft is a townhome or a cottage, up to 2000 sq ft is a "home", up to 3000 sq ft is a "house", up to 4000 sq ft is a "barn", and anything above that is a "freakin' warehouse".

One celebrity couple used to lose each other in their mansion. They tried cell phones but had coverage/shielding problems. They finally decided that when anyone heard yelling in the house that they'd muster in the kitchen...

 

[justin]

I think below 1500 sq ft is a townhome or a cottage, up to 2000 sq ft is a "home", up to 3000 sq ft is a "house", up to 4000 sq ft is a "barn", and anything above that is a "freakin' warehouse".

One celebrity couple used to lose each other in their mansion. They tried cell phones but had coverage/shielding problems. They finally decided that when anyone heard yelling in the house that they'd muster in the kitchen...

My officemate next door is wondering why I'm laughing!!!

My domicile fits in the "home" category as outlined above, and I still get the occasional "Honey, where are you?" from my wife. "In HERE!!!!" "Where? I can hear you but I've looked everywhere and I can't find you!". "IN HERE!!!!!!!!"

Sometimes I think life would be easier if we rented a 1 BR or studio apartment.


In regards to the "how big is a mansion?" question, I think it is determined in a similar fashion to "how much do you need to be "rich"?

My house is under 2000 sf, so a 4000-6000 sf house might be a mansion to me. If you live in a 6000 sf house, you might think 10000 sf is a mansion. On the other hand, if you lived in a 300 sf efficiency and were broke, you'd think my house is a mansion (maybe).