Money Where Mouth Is - Listed Our House For Sale - Already Frustrated

Steve_Jones said:

The flaws of the current house were there when you bought it, they didn’t change the street location, or the stairs. From previous threads, you ignored those flaws because you were in a rush, didn’t want to rent, etc.  The new place has flaws, but you have already discounted those flaws as easily fixed,  because you are in a rush this time too. 

I wasn't in a rush to buy, but my wife was. She lead the way on that mark. After looking at multiples places that needed a lot of work, we were happy to find a place that didn't need anything. I mean we're talking $260k homes with unlevel floors. Our place seemed, and still does, very nice by comparison. Little did we know that the things it did need we couldn't fix. Additionally, many of our issues with the house are solely because of life with a child. As single people, we loved our house, and I still think I'd be inclined to stay if I didn't have a little one. In the last 3 years, our attention to those details is more acute. 

You have convinced yourself you need to move, and that is fine, but realize it will cost you money. It’s not the neighbors fault, it’s not the streets fault, it’s because buying a house and selling it in 2 years usually costs money.  Any appreciation is eaten away by fees, commissions, etc. 6% of the 300k you paid is $18,000 so you need $318k plus fees to break even at this point, that’s tough to do so quickly. 

The thing is, we would need that 6% no matter what. Doesn't matter if its in a year, or 5 years from now, we're going to need 6% to cover our costs on THIS house. What if that 6% NEVER happens? I know the idea of max appreciation is flaweed, but the house sold for $300k in 2007, and $300k in 2016. Obviously the area is not massively going up in value despite the $400k homes selling only a few blocks away. My junky neighbors across the street are not likely to leave, the house will not magically appear on a road with less traffic, or suddenly be on a cul-de-sac. The things that impact its value are 1) current competition on the market - what buyes are comparing it to and 2) its location. 

I framed it like this: if I could pay $25,000 to make my junk neighbors disappear, my house sit on a flat section of street with on-street parking (I can't park on the street due to traffic at my current place) and could put my house in a quieter section of neighborhood, would I pay that $25,000? Hell Yes. Any day. I have that opportunity with the new house. 

So, the question is, do we take the loss today, when we've got a great house lined up with great interest rates? Or do we take that loss in 3-4 years when interest rates are higher, economy isn't so good, ready to move for jobs, ready to move because kiddo is starting school, etc? 

Personally, I don't want to spend the rest of my time here in Flagstaff loathing my neighborhood.  

Take the loss.

That's my plan for my house.  I'm not going to be burdened with house E36 M3 in an area I hate just because I feel like my home should be worth $10-20k more.  Its not worth the stress.

Take the loss, because realistically you won't ever really make it up. That house will not appreciate.

Also, do an in depth analysis of houses that have sold in your neighborhood recently. Figure out what your house is really, really worth. And then, when you do that, compare it to current listings outside of your neighborhood. What else is out there for the same price? What would you buy if you were buying today, no emotional attachment?

I’m gonna speak contrary to most people here. 

Take the loss.  Because it probably won’t be a loss. 

You made some mistakes with the house you are in, and you’ve learned from them. You won’t sell your house any time soon for a gain. That’s the wrong reason to stay. 

Move because it is what you want. It’s the cost of enjoyment of life. 

I am amused by how many people on this website would say “I wouldn’t give up a fun car for any reason at all, no matter how sexy she was”, but when it comes to a house the mantra is “Be responsible”. 

Plus, you’re gonna make money.  Because you will be back in an appreciation curve.

I lived in a town with a depressed market for 15 years.  Simple living, but no real estate appreciation.  After 15 years I sold for about $25,000 less than I had in it, and moved to an area where I had to take on $50,000 bigger mortgage for a comparable house.  It felt terrible.

A friend who was really good with money said, “Don’t worry, you’ll be back in an appreciation curve, and make it all up”.  What he meant was I was moving into a highly desirable fast growing neighborhood.

Sure enough.  In 2 years my new house is worth about $44,000 more than what I paid for it.

Go ahead.  Do what is stupid.  Enjoy life.  You’ll probably end up making money on it.

...and if you don’t, who cares?

Think of it like a fun car that the whole family can enjoy. 

In reply to SVreX :

I think the obvious difference between a fun car and a house is that for most members here, a fun car represents a fraction of their net worth while a house is typically the most valuable thing a person will own. The financial ramifications are far greater when you're talking about irresponsibly using 6 figures than A 4 or low 5 figure toy car. You can also sell a car without significant transaction costs, or even take it with you if life changes and you need to move but can't get it sold in time.

I agree that staying in the current house is a bad idea if OP is unhappy there, and that spending a bit more on the new place, or losing a bit to unload the current place is likely money well spent (assuming it won't stress OPs finances to do it). But I also think that buying only makes sense as a long term plan (10+ years).

Just for kicks: 

Here's is my current neighborhood. I focused primarily on the area on the hill. Most everything aside from Shoshone is on some sort of slope in this area. These are recent sales for the last 2-3 years. 

Notice those Zillow "Zestimates?" Yea. They are full of crap. Some of those $300k places might sell for $230k tops. 

By comparison, here's the recent sales for the proposed new neighborhood. We would be buying slightly below the average of the recent sales, and pretty far below the estimate Zestimates. We're hoping that by buying into a neighborhood with less diversity and range of sales, we'll have a better idea of appreciation. 

In reply to pheller :

You don’t really need us to answer this for you. You know what you want. 

I don’t see you as indecisive. I see you as someone who likes to talk through the options before finalizing your decisions (regardless of whether you agree with our opinions)

I’m like that too. 

SVreX: 

What's your experience with asking utilities to move wire boxes? 

In my case, its an ISP/Cable provider, a tiny little box blocking access to a beautiful patch of parking area. I've been calling and emailing the utility with little in the way of responses. I know for gas and electric, I'd get responses near immediately, but ISPs don't play by those rules. 

The box is in a utility easement, but its on the far far outside corner of that easement. The electric and water boxes are much closer the sidewalk. 

In reply to pheller :

Unlikely. 

House looks similar inside to one around the corner that just dropped to $310k... but they didn’t even want to show a street photo. That’s weird.

Similar size to a couple nearby that are pending after asking mid to upper 300’s. 

Sit tight and see see what happens. It’ll sell. If the other contract wasn’t contingent, and you can walk.. I’d walk from that deal rather than be burdened by two mortgages. 

In reply to STM317 :

I only agree with you a little bit. 

A house may be the most valuable thing many own, but for most it is still a rather small  amount of net worth. By the time the debts are paid, most people have minimal equity. 

This is not a six figure gamble for pheller. It’s a $25,000 market adjustment with the opportunity to be in something he loves with a better appreciation curve. It sounds like he may even be walking into a net positive equity position  

In my book, that is a worthwhile investment, not a gamble. 

Seeing as the new place is close to town, off of lake Mary road vs being next to kachina village trailer park south of town, take water loss you can afford and don’t look back.

I lived on Mohawk on the other side of Lake Mary in the 90s. 

I would take the loss and move on. We were in a similar spot a few years ago with a house with no garage on a dead end street that wouldn’t have supported any upgrades. We took a small loss to move into something that was a better fit for our growing family, and had a better chance of maintaining value  in the long run. Haven’t regretted selling our old place one bit.

Houses weren't always investments, if your quality of life is damaged by the current house, berkeley it. Get rid of it

In reply to SVreX :

Yeah, I think I've said similar things too. I just have a problem with the idea that people might be making such important choices based on emotion and impulse without fully fleshing them out. The house you choose can have major financial impacts on your life (both good and bad) and there are some interesting studies that show how even living on a specific side of a certain street can alter the path of a child's life and their likelihood of being successful.

OP needs to fully understand his situation, himself, and the pros/cons of the new place. Let those facts inform his decision regarding the current place. In general, buying (or renting) the best neighborhood that you can reasonably afford is typically a really good idea. But you've still got to stay there for awhile to see most of the benefits (financial or otherwise) of owning.

STM317 said:

In general, buying (or renting) the best neighborhood that you can reasonably afford is typically a really good idea.

Agree and disagree.

I could reasonably afford to live in a neighborhood that is 3x the price of mine.  But it would be overkill and a waste of money.

However, 2x probably makes sense. 

I thought I was being smart by limiting my purchase price, house size, etc.  Lower homeownership expenses all around, right?  Well, except that A) many of the construction methods used on cheaper homes cost you more money in the long run and B) the neighbors you end up with can impact your appreciation as we are seeing in this thread.

ProDarwin said:

STM317 said:

In general, buying (or renting) the best neighborhood that you can reasonably afford is typically a really good idea.

Agree and disagree.

I could reasonably afford to live in a neighborhood that is 3x the price of mine.  But it would be overkill and a waste of money.

However, 2x probably makes sense. 

 

I thought I was being smart by limiting my purchase price, house size, etc.  Lower homeownership expenses all around, right?  Well, except that A) many of the construction methods used on cheaper homes cost you more money in the long run and B) the neighbors you end up with can impact your appreciation as we are seeing in this thread.

I think you guys are talking about slightly different things. You're talking about the house you can afford, or more specifically the mortgage that you can afford. STM317 is talking about the neighborhood - basically, he's saying buy the best neighborhood you can afford, even if it means a crappy house. The one thing you can't change is location - so buy the best location you can.

This is essentially what we did. We bought a house that we were lucky that a builder didn't buy to tear down. We've been here 3 years now, and since then there have been 4 homes within a 3 block radius that have been sold for mroe than we paid for ours... and torn down. Which is absolutely insane.

Take the loss and move on.  You’ve got a lot of years to make it up.

STM317 said:

 In general, buying (or renting) the best neighborhood that you can reasonably afford is typically a really good idea. 

I think a lot of people overestimate what they can afford, though, and wind up in debt up to their eyeballs. When I bought a house, I asked myself: can I afford to live there if I wind up unemployed and have to deliver pizza for six months before I find another career based job? Then I bought a house where that was true.
 

mtn said:

ProDarwin said:

STM317 said:

In general, buying (or renting) the best neighborhood that you can reasonably afford is typically a really good idea.

Agree and disagree.

I could reasonably afford to live in a neighborhood that is 3x the price of mine.  But it would be overkill and a waste of money.

However, 2x probably makes sense. 

 

I thought I was being smart by limiting my purchase price, house size, etc.  Lower homeownership expenses all around, right?  Well, except that A) many of the construction methods used on cheaper homes cost you more money in the long run and B) the neighbors you end up with can impact your appreciation as we are seeing in this thread.

 

I think you guys are talking about slightly different things. You're talking about the house you can afford, or more specifically the mortgage that you can afford. STM317 is talking about the neighborhood - basically, he's saying buy the best neighborhood you can afford, even if it means a crappy house. The one thing you can't change is location - so buy the best location you can.

Yeah, this. The financial aspects of housing are tremendously important, but there's certainly more to choosing where you live than finances.

A nice house is great. But the location, and the things around the house matter too, and not just in a financial sense. Schools matter. Quality of roads matter. Proximity to convenient things matters. These make life nicer, and can increase appreciation which is almost always a good thing for the owner.

But there are other less obvious things that impact the lives and happiness of your family too. The quality of the neighbors matters. The kids that ride the school bus with your kid matter. The sense of community (or lack of) matters. These things can be harder to see, but can have real impacts on things like how successful your kid is in school, and how much a house feels like "home" rather than just a place you sleep. These intangibles are often the things that make one property or neighborhood a better "fit" than another.

In reply to STM317 :

The trouble is things change.

Good neighbors move out, concerned and active citizens die or lose interest. Businesses fail or move away and with them their workforce.  

Or the opposite happens and previously poor or bad neighborhoods are gentrified and become desirable.  

Your only protection is involvement. Become a mover and shaker in your neighborhood.  Do the things that attract good and scare away trouble.   

It's been a few weeks, hopefully you are packing. 

SVreX said:

I’m gonna speak contrary to most people here. 

Take the loss.  Because it probably won’t be a loss. 

You made some mistakes with the house you are in, and you’ve learned from them. You won’t sell your house any time soon for a gain. That’s the wrong reason to stay. 

Move because it is what you want. It’s the cost of enjoyment of life. 

I am amused by how many people on this website would say “I wouldn’t give up a fun car for any reason at all, no matter how sexy she was”, but when it comes to a house the mantra is “Be responsible”. 

Plus, you’re gonna make money.  Because you will be back in an appreciation curve.

I lived in a town with a depressed market for 15 years.  Simple living, but no real estate appreciation.  After 15 years I sold for about $25,000 less than I had in it, and moved to an area where I had to take on $50,000 bigger mortgage for a comparable house.  It felt terrible.

A friend who was really good with money said, “Don’t worry, you’ll be back in an appreciation curve, and make it all up”.  What he meant was I was moving into a highly desirable fast growing neighborhood.

Sure enough.  In 2 years my new house is worth about $44,000 more than what I paid for it.

Go ahead.  Do what is stupid.  Enjoy life.  You’ll probably end up making money on it.

 

 

You are right, you’re back on the appreciation curve. Not everybody who moves winds up there. 

I’ve always felt the smart move is to buy the cheapest house in the best neighborhood you can get.  To do so though requires discipline.  Living with the flaws or less desirable aspects until your income goes to a place where you can afford to either fix the flaws or afforded have someone fix them for you. 

I bought my first house on that basis and paid $27,800.  9 years later it sold for $99,000 I thought my updates and repairs got it there.  A week later it was in a dumpster and a new home going up.  

I bought this place at $107,000  but with the equity I’d built up over 9 years the payments were 1/2 of my old ones. ( and the fact interest rates had dropped from 19% down to 9.9% ) 

In rough terms real estate appreciates at about the rate of inflation.  Special real estate can appreciate at 2-3 times the rate of inflation.  Special real estate is highly desirable, little availability, like water front, fantastic views, rapidly appreciating ( so called Gentrified neighborhoods ) New access such as a nearby lite rail,  or new nearby freeway, etc.  

Having said all that, timing  is the major determination of appreciation.  In 2007 the bank appraised my home at 1.3 million when finished. ( a million at that point)  2009 the state appraised it at a little over $500,000.  A decade later it’s worth more than 3 times that.  Same basic place.