Housing

Million Dollar Homes

October 10, 2005 By Jeffrey Strain 1 Comment

A million dollar home isn’t what it used to be according to an article at usatoday.com:

The surge in high-end prices has happened quickly. The Census Bureau’s 2004 American Community Survey found 1,034,386 homes worth at least $1 million in 2004, compared to 595,441 in 2002 and only 394,878 in 2000.

I know this is the case with my mom’s house in the Silicon Valley of California. Homes on our block have been selling for $1 million or more and there certainly isn’t anything spectacular about them other than being in a “good location” – mind you these are track homes that are 30 years old that happen to be in a good school district, but don’t have any views of any kind. If I’m going to buy a million dollar home, it would have to look a lot better than the one I grew up in.

This all means that I won’t be moving back to the SF Bay area when I return from Japan. My sister and her husband who live in San Francisco (they rent) at the moment are looking to move out because they can’t afford to purchase a house there.

I was talking with my dad about prices in the SF bay area and I think you’d be hard pressed to find a home with land in the Santa Clara Valley for under $500,000. I would be surprised if there are more than a few and imagine they would be major “fixer uppers” Housing prices are really quite crazy in that area.

Cost vs. Value Home Remodeling Report

October 10, 2005 By Jeffrey Strain Leave a Comment

Wondering if a the remodel you’re planning will add value to your house or be money down the drain? You can get a general idea of what remodels will add value to your house from Remodeling magazine’s Cost vs. Value Report.

I have a friend who is in the process of remodeling their house and he ended up choosing the remodels they wanted to do based on the return of the investment he would get. That is, remodels that would likely add value to his house got first priority. A good way to approach it if you have a lot you want to do to a house in my opinion.

Where you live can make a big difference in the return on investment for a remodel. There are a number of areas where your remodel return can be over 100% if you sell within a year, so if you’re remodeling with resale in mind, picking the remodels that give the best return on money makes sense.

The Downside Of Refinancing

September 22, 2005 By Nate Leave a Comment

The people affected by Hurricane Katrina will see first hand the downside of taking equity out of their homes in the coming year. Where many might have been able to break even had they left their equity alone, a good number will now be facing foreclosure at the very least and possibly bankruptcy. While mortgage companies have been lenient due to the circumstances, there will be a time when the loans will have to be paid back. They may be letting survivors defer payments for the time being and even waiving late fees and not reporting delinquent accounts to the credit bureaus, but this is a short-term program that won’t last forever. (you can read more about this at money.com)

This is the danger of taking equity out of your home — which many people seem to be doing without a second thought these days. If something unexpected happens, there is a good chance you’ll lose it all. It doesn’t even have to be a major disaster like Katrina. Simply losing your job could land you in the same position (since the lenders probably won’t be lenient as they have been with the Katrina victims).

When it comes to consolidating debt, using your home equity should be a last resort – and then only when you have pinpointed and resolved the reasons that you got you in debt in the first place. Katrina has taught a lot of hard lessons to many of the people living in the area that was hit by her, and for many it will teach even more hard lessons on how the personal financial decisions they made in the past will come back to haunt them.