How much is too much? (appointed, sale, real estate)

[jimj]

I'm going to post this in 2 different forums to get a couple of different opinions. I keep seeing posts about housing costs and how home prices are being run up by people moving here or by developers and people are being over charged.
My question is how much profit should one expect on a house and I will give an example.
A hypothetical situation, let's say you by a lot that is 80k. You put in well,septic and hook to gas,electric,phone and cable. You build a 2500 sqft house that is an upper run of the mill design outside with lap siding and is nicely appointed with high end appliances,tile and carpet, hand stained wood trim and you landscape the whole lot with a lawn and sprinkler system.
Since you have built (2 years ago) lots have sold for 40k more than you paid and building costs have risen not to mention appliances,paving etc have gone up. You put your own sweat and labor into building along with hiring subs and doing all the lanscaping yourself. Your cost at the end is 330k. What after realtor fees do you think is a fair profit? Now remember, you don't want to be part of the gouging the buyer crowd you just want a fair return for both buyer and seller. Now I know that there are varieables like where it is and curb appeal etc but try and think of this in general terms, all things considered equal.....

[Anchorless]

I think this is a disingenuous hypothetical.

As much as people may want to place blame on buyers and sellers, it really isn't their fault. I'd love to see a world where people sell a great product at a minimum price, and buyers offer over sale price. That's just not the way it is, though. It's a capitalist system, through and through, for better and for worse.

Montana currently has more demand (in certain areas) than supply - and the crux of the situation is that if citizens want to stabilize population and growth, they're only restricting supply, not decreasing demand. So the s**t**y reality of it is that prices will continue to increase.

It's pretty much pick your poison.

My "solution" is to create disincentives for people and business (especially developers) to move into areas like Montana. Don't give tax breaks for business, increased tax rates for new and second home owners, things like that. You have to make it so people would rather not come there, but at the same time do so without a) penalizing people that already live there, and b) without completely destroying or curbing the existing economic structure. Most importantly, keep places unique. Keep Montana Montana - if you refuse certain industry, certain amenities, and other things that are more "California" or more "New England," but wholly "Montana," some people might be dissuaded to move there.

Other than that, if you want to restrict growth in a high-demand area, be prepared to suffer increased prices.

[jimj]

Anchor,
How is it disigenuous? Pretty straightforward question, what profit is fair? This has come up from many posts about people selling for outrageous prices and making mega bucks to people saying whatever you can get is fair. I just used a scenerio to make it more realistic.

As for the rest of what you said, it's definately food for thought.....

[Anchorless]

It's disingenuous because the stock answer is "as much as you can get," in which case it serves the rhetorical strategy of your question, which seems to be something like "well then if you think its okay for a landowner to sell for as much as s/he can, how can you complain about the price of housing here."

I think that's a disingenuous way of looking at the situation for reasons I briefly explained above.

[jimj]

It's actually not meant to illicit that answer, though I guess one could answer that way. I'm hoping more for specifics and the reasons behind the thought.

[8 SNAKE]

Originally Posted by Anchorless

My "solution" is to create disincentives for people and business (especially developers) to move into areas like Montana. Don't give tax breaks for business, increased tax rates for new and second home owners, things like that. You have to make it so people would rather not come there, but at the same time do so without a) penalizing people that already live there, and b) without completely destroying or curbing the existing economic structure. Most importantly, keep places unique. Keep Montana Montana - if you refuse certain industry, certain amenities, and other things that are more "California" or more "New England," but wholly "Montana," some people might be dissuaded to move there.

Other than that, if you want to restrict growth in a high-demand area, be prepared to suffer increased prices.

What happens to your utopia when the hammer gets dropped on wages because no new businesses come in and current businesses have the employment market cornered?

What happens when all of the people in Montana employed in construction (no small % of the workforce, mind you) are out of work and enter the labor pool? Now you've got a lot more people chasing the same number of jobs. What happens? Wages take a free-fall.

Eventually people move out and the local economies go bust. Soon the people left scream because their property values just dropped in half, the job market is terrible and tax revenues from businesses evaporate. It's a losing proposition.

Seems to me that everyone wants to be the last person allowed into paradise. Once you get there, you want the gates pulled shut and locked tight. It's a nice plan, as long as you're the last one inside the gate...

[jenzebel]

JimJ--I understand your point, indeed it is the capitalist way to make the maximum amount of money from your investment and efforts. Anchorless really put it well; one can't really ask or expect another to sell something for less than what they could get for it in a free market.

I agree with Anchorless in that there should be disincentives to moving here because as it is now, this growth is hurting the native or near-native (depending on your perspective or definition) Montanans, the people that have invested their whole lives here and have stayed here at home despite the low wages, high price of fuel, cost of heating, etc.

My main job in Montana (professional level) pays half of what it would in much of the rest of the country, necessitating a second job. Despite two of us working four jobs (all of those jobs paying much less here than other areas of the country) buying a home or property is out of our reach. Many Montanans are stuck in the same boat, we can't afford property in our home state. We were too late; the ratio of wages we earn to the cost of real estate now in Montana is totally out of proportion and many of us either didn't see it coming or weren't established enough in our careers and our lives to think about purchasing before this all began. Now the only houses we can afford are fixer uppers needing extensive foundation and other major repairs and no one here wants to loan on those.

It feels like we've been penalized, in a sense, for our decision to stay here. Deciding to remain in Montana, to live and work here and contribute to a community rather than leave and make a bunch more money has cost me my lifestyle and my ability to own my own modest home in the place I know as home. I never thought I'd have to pay this kind of price my loyalty and of course I am angry about it.

[imbobbbb]

well maybe you should move to eastern montana where there are many houses you can buy cheaper than a new pickup truck.maybe then you could work one job.a lot of people all over the country also dont make a lot of money,even those who live in much more expensive places then montana.a lot of jobs also dont pay all that much different in montana then other places.all of my family that have stayed in montana since 1865 have somehow managed and those that left have hardly become rich elsewhere.housing is cheaper in 3/5 ths of the state then most of the country and 3/5ths of the counties are losing population.perhaps you think montana should suceed from the union,build a fence around it and only let all these 'foreigners'from other states in on 'tourist visas'.many people in many states are priced out of the market based on the cost of a house to average wage situation.its the way the world works.

[8 SNAKE]

Originally Posted by jenzebel

I agree with Anchorless in that there should be disincentives to moving here because as it is now, this growth is hurting the native or near-native (depending on your perspective or definition) Montanans, the people that have invested their whole lives here and have stayed here at home despite the low wages, high price of fuel, cost of heating, etc.

My main job in Montana (professional level) pays half of what it would in much of the rest of the country, necessitating a second job. Despite two of us working four jobs (all of those jobs paying much less here than other areas of the country) buying a home or property is out of our reach. Many Montanans are stuck in the same boat, we can't afford property in our home state. We were too late; the ratio of wages we earn to the cost of real estate now in Montana is totally out of proportion and many of us either didn't see it coming or weren't established enough in our careers and our lives to think about purchasing before this all began. Now the only houses we can afford are fixer uppers needing extensive foundation and other major repairs and no one here wants to loan on those.

It feels like we've been penalized, in a sense, for our decision to stay here. Deciding to remain in Montana, to live and work here and contribute to a community rather than leave and make a bunch more money has cost me my lifestyle and my ability to own my own modest home in the place I know as home. I never thought I'd have to pay this kind of price my loyalty and of course I am angry about it.

I don't wish to sound harsh, but this sounds like a pity party that you're throwing for yourself. If you really want to get a home of your own, you will find the resolve to make it happen. I'm certain that there will be sacrifices that you make to get it done, but you will find a way if you set your mind to it.

As for natives getting some type of preferential treatment, that's a load of horse puckey in my opinion. You complain about not finding a way to realize your dream (home ownership in MT), and think you should get some type of special "deal" because you're there now? Nonsense. Perhaps I want the same dream, and I'm out here in Missouri busting my hump to get ahead in life so that I can make it happen for myself because I see this as a more effective method. Why should I be at a disadvantage just because I wasn't born in Montana?

[jenzebel]

Originally Posted by 8 SNAKE

I don't wish to sound harsh, but this sounds like a pity party that you're throwing for yourself. If you really want to get a home of your own, you will find the resolve to make it happen. I'm certain that there will be sacrifices that you make to get it done, but you will find a way if you set your mind to it.

As for natives getting some type of preferential treatment, that's a load of horse puckey in my opinion. You complain about not finding a way to realize your dream (home ownership in MT), and think you should get some type of special "deal" because you're there now? Nonsense. Perhaps I want the same dream, and I'm out here in Missouri busting my hump to get ahead in life so that I can make it happen for myself because I see this as a more effective method. Why should I be at a disadvantage just because I wasn't born in Montana?

Missouri is cheap compared to Montana. I see lots of cheap real estate listed in Missouri. Your state hasn't been taken over by outside interests with the corresponding rise in property prices so you have no idea what we are going through here.

Alaska has many state jobs that you can only apply for only if you have established residency and I don't see why Montana can't do the same.