Home Prices@1895 level -may never recover? (Dallas, Plano: foreclosure, new home, neighborhood)

[Warnpeace]

I wonder how much money realtor fee adds to a house price. Let's say a house was built in 1980 for 500,000 and since then its been sold and resold six times with 6% commission. Didn't that add 360,000 to the home price?

[TheOverdog]

I wonder how much money realtor fee adds to a house price. Let's say a house was built in 1980 for 500,000 and since then its been sold and resold six times with 6% commission. Didn't that add 360,000 to the home price?

That depends, but generally the answer is no. Houses are generally priced based on desirablity of the neighborhood and amenities, not based on original cost plus transactions costs.

I would guess that the majority of Dallas core area homes really aren't going to appreciate at all due to the downward pressure by the growing outlying suburbs, which grow increasingly far from the core, until gas is about $8 a gallon, minus a small number of exclusive areas. Then you will begin to see appreciation beyond the rate of inflation. DFW spends much much more on highway infrastructure growth making those exurbs comparable to the inner core than many comparable but more dense cities. It's [arguably] good for growth in a dog-eat-dog kind of way, but not good for the individual owners.

[Rakin]

Originally Posted by Warnpeace

I wonder how much money realtor fee adds to a house price. Let's say a house was built in 1980 for 500,000 and since then its been sold and resold six times with 6% commission. Didn't that add 360,000 to the home price?

Bad logic... how about the homes that have gone in value the last 3 years ? No one can just add the expense or fees to the price of a house.

[EDS_]

Originally Posted by BigT3x

Normal appreciation for the housing market is zero. Look at the graph.

Well the graph is a macro shot of "home" prices across the nation sampled once per year covering many years. I can assure you I've made money, adjusting out for inflation and other "costs" on two of the three homes I've sold in my life.

My wife's parents bought a home in Florida in about 1965 for $16,500 cash. They sold the home for not quite $600K in 2003. I don't know all of their costs over time but I find it hard to believe they didn't make money on that deal.

[Lakewooder]

Originally Posted by TheOverdog

I would guess that the majority of Dallas core area homes really aren't going to appreciate at all due to the downward pressure by the growing outlying suburbs, which grow increasingly far from the core, until gas is about $8 a gallon, minus a small number of exclusive areas

East Dallas home prices up 20%, sales up 36% Probably driven by Lakewood/M-Streets and great schools but Area 12 also includes many areas far from 'exclusive' or at least not in the past..

[synchronicity]

Originally Posted by EDS_

My wife's parents bought a home in Florida in about 1965 for $16,500 cash. They sold the home for not quite $600K in 2003.

That's a hair shy of 10% annualized. Not a bad return over 38 years. FWIW, the people who bought my grandmother's house in 1986 sold it in 2004, and I believe their CAGR was somewhere around six and two-thirds percent. Obviously, in both examples we're dealing with homes sold last decade which skews the results upwards.

I get that people had unrealistic expectations of home price increases in the latter half of last decade and I understand that there are ongoing maintenance/upkeep costs for a residence one owns rather than rents. Still, even assuming a modest increase in home value every year, I have a difficult time seeing it as a "bad" deal in most circumstances, even if one looks at it solely from a financial perspective and does not include the non-financial benefits of owning one's own residence. Maybe I'll spreadsheet it out.

[TheOverdog]

East Dallas home prices up 20%, sales up 36% Probably driven by Lakewood/M-Streets and great schools but Area 12 also includes many areas far from 'exclusive' or at least not in the past..

I should have said "unique" when I said "exclusive". I would say the Whiterock Lake area is a unique area in Dallas, and this would have higher than normal appreciation.

[skids929]

Originally Posted by EDS_

Well the graph is a macro shot of "home" prices across the nation sampled once per year covering many years. I can assure you I've made money, adjusting out for inflation and other "costs" on two of the three homes I've sold in my life.

My wife's parents bought a home in Florida in about 1965 for $16,500 cash. They sold the home for not quite $600K in 2003. I don't know all of their costs over time but I find it hard to believe they didn't make money on that deal.

Spot on..Devil is in the details here. Timing when you sold etc seems to be the leading albeit varying indicator. No one lives long enough in any home to give a rats behind about this long a trend.

Interesting enough to bend the mind a bit, but don't put too much emphasis on it to the point you only live in a home for it's utility. Its typically a wise investment, that if you stick to the basic tenets (location) you should make a return.

These trends prove very little for someone with an economic view of maybe 20 years at best. I am sitting on a loser, bought in 07, lost $50k, don't plan on ever getting it back. I am not panicking, disappointed maybe. Gotta love Economics, they don't call it the dismal science for nothing.

[Pete53FR]

Its strange but the house flippers may bring the market back up. They buy older homes fix them up and inflate the sales numbers which for some reason I don't understand establishes the worth of all the other homes in the neighborhood

[EDS_]

Originally Posted by skids929

Spot on..Devil is in the details here. Timing when you sold etc seems to be the leading albeit varying indicator. No one lives long enough in any home to give a rats behind about this long a trend.

Interesting enough to bend the mind a bit, but don't put too much emphasis on it to the point you only live in a home for it's utility. Its typically a wise investment, that if you stick to the basic tenets (location) you should make a return.

These trends prove very little for someone with an economic view of maybe 20 years at best. I am sitting on a loser, bought in 07, lost $50k, don't plan on ever getting it back. I am not panicking, disappointed maybe. Gotta love Economics, they don't call it the dismal science for nothing.

I think that's about perfect. As someone who studies economics in college and grad school through that prism an eye towards timing develops. For example the all time inflation adjusted high price for gold was in about 1125 AD England. So if some guy ~913 years ago had bought some gold then it he'd still be underwater and yet anyone who bought gold hard say five years ago looks like a hero now.