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In his most recent blog, the Mayor of Cary notes that the average life expectancy of a home is 40 years. I am not sure if this is for Cary, the Triangle area, or the nation. Either way, it seems really low to me. Houses over 100 years old are not uncommon and houses built in the 50s 60s and 70s are aplenty with most showing no signs of "falling down". I mean, if the life expectancy of a house is "only" 40 years, shouldn't a house be treated more like some sort of liability that depreciates over time (cars, heavy machinery, planes) instead of a true asset (as they are)? Maybe they do depreciate in a way -when comparing their discount to newer/new build???? Also, is it correct to think that as a house ages more of the "value" is transferred from the structure to the land????
If so, in theory, then any house that is around 40+ years old should only sell for what the land itself is worth.... which obviously doesn't happen (I wish).
If so, in theory, then any new house purchased should see its value immediately plummet like when you drive a new car off the lot (older cars have already depreciated); especially, new build in less desirable areas.
In his most recent blog, the Mayor of Cary notes that the average life expectancy of a home is 40 years. I am not sure if this is for Cary, the Triangle area, or the nation. Either way, it seems really low to me. Houses over 100 years old are not uncommon and houses built in the 50s 60s and 70s are aplenty with most showing no signs of "falling down". I mean, if the life expectancy of a house is "only" 40 years, shouldn't a house be treated more like some sort of liability that depreciates over time (cars, heavy machinery, planes) instead of a true asset (as they are)? Maybe they do depreciate in a way -when comparing their discount to newer/new build???? Also, is it correct to think that as a house ages more of the "value" is transferred from the structure to the land????
If so, in theory, then any house that is around 40+ years old should only sell for what the land itself is worth.... which obviously doesn't happen (I wish)..
If so, in theory, then any new house purchased should see its value immediately plummet like when you drive a new car off the lot (older cars have already depreciated); especially, new build in less desirable areas.
"Life expectancy" generally refers to minimal design life for serviceability. And, it is not difficult to find homes that are 40 years old with functional, design, esthetic, or structural/material deficiencies that significantly affect value. Think asbestos, lead-based paint, aluminum wiring, single-pane windows, low insulation standards, 3/8" plywood roof sheathing 24" o.c. in terms of design and component selection.
Esthetics? Outdated floor plans, 8' ceilings or less, 30" bath vanities, phone booth showers, few windows due to 1970's design influenced by original energy crises.
The land supports the house.
That is why we call it "real" estate. The dirt is "real" and permanent, and "under all there is the land." "Selling houses" is basically slang, similar to "a new ride" or "a new set of wheels."
Yes, structures do depreciate. They also appreciate based on market dynamics. And, costs of new construction impact resales values. The two float in tandem, just like with cars. Supply and demand.
In much of the Triangle, particularly true in Cary, the land appreciates very nicely.
Tathalso noted this from the blog: "More people travel to work in Cary than leave for work." That is a maturation.
"Life expectancy" generally refers to minimal design life for serviceability. And, it is not difficult to find homes that are 40 years old with functional, design, esthetic, or structural/material deficiencies that significantly affect value. Think asbestos, lead-based paint, aluminum wiring, single-pane windows, low insulation standards, 3/8" plywood roof sheathing 24" o.c. in terms of design and component selection.
Esthetics? Outdated floor plans, 8' ceilings or less, 30" bath vanities, phone booth showers, few windows due to 1970's design influenced by original energy crises.
.
This is house I read it. There are houses standing that are over 100 years old, but you would not live in them in their original state.
The low quality materials used today combined with the lousy soil that puts many homes out of plumb limits the useful life.
The homes start to bleed maintenance needs and it becomes economically wise to scrap them.
I'm petty sure this is an accounting method for depreciation purposes. It doesn't mean the "Average" house will be scraped after 40 years, even with the construction material quality being what they are/were.
The low quality materials used today combined with the lousy soil that puts many homes out of plumb limits the useful life.
The homes start to bleed maintenance needs and it becomes economically wise to scrap them.
^ #AlternativeFacts
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