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Old 07-28-2010, 09:11 AM
 
2 posts, read 2,970 times
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...is to tear down a house in an established (old) neighborhood with good schools and build new. Or so says the book "Middle Class Millionaires." The author also says:

--buying and keeping an old house is a waste of money because eventually people will only want new houses with new features (like great rooms, high ceilings, big baths etc.)

--the only way to tell if you are buying in a good neighborhood is to find the neighborhood with all the "teardown activity"

--you can tell the best schools by looking at neighborhoods with the most tear downs

--new houses in old neighborhoods hold resale value the best

so basically, if you have an old house in an established neighborhood, you are doing something wrong

and if you have a new house in a far suburb, you are also doing something wrong

The author says that the "only way to go" is to tear down the 1940s cape cod in the established neighborhood and build new. But who can afford this?????

What say you all?
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Old 07-28-2010, 09:20 AM
 
Location: Colorado Springs, CO
1,570 posts, read 5,977,689 times
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That's a crazy thought.
I have certainly seen areas where houses are typically - nearly torn down to rebuild a bigger house. The area I have found this in is lake front property.

However, a blanket statement that all old houses should be torn down is crazy. Historic districts represent some of the most costly real estate in the country. Restoring a turn of the century home is one thing - upgrading electrical, etc. However, the main value of a historic home is to keep the age apparent.
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Old 07-28-2010, 09:22 AM
 
Location: Tempe, Arizona
4,511 posts, read 13,554,308 times
Reputation: 2201
Quote:
Originally Posted by e1sign View Post
...The author says that the "only way to go" is to tear down the 1940s cape cod in the established neighborhood and build new. But who can afford this?????

What say you all?
Ridiculous. The premise of the book is flawed. It was written during the peak of the housing boom when tear downs were popular (and much opposed in those older neighborhoods). I suspect many who did this are now no longer in the millionaire category.

Last edited by rjrcm; 07-28-2010 at 09:39 AM..
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Old 07-28-2010, 10:54 AM
 
Location: Salem, OR
15,539 posts, read 40,308,808 times
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Definitely not true in my area. Renovated old homes sell incredibly well. People want the charm with the old plumbing and electrical issues.

Not everyone wants cookie cutter McMansions. There are many buyers who love arched doorways, glass door knobs, 100 year old hardwoods that are worn. They want charm and cozy. I have worked with many old home buyers. I do agree that there are old home buyers and new home buyers though. The author of the book is clearly a new home buyer kind of person.

People want homes in good shape that are renovated. Tear downs are not popular at all in my area.
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Old 07-28-2010, 10:59 AM
 
Location: NJ
17,574 posts, read 46,060,080 times
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Quote:
Originally Posted by e1sign View Post

--you can tell the best schools by looking at neighborhoods with the most tear downs
Here is a crazy thought. You can tell the best schools by researching the schools.
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Old 07-28-2010, 11:47 AM
 
28,455 posts, read 85,157,040 times
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Default Times changes, no magic formula...

I have owned older homes in nicer areas. There is / was some teardown activity, but the total return from rent and appreciation was as good if not better than on selling a née home.

I have also owned older homes in areas that are a bit more working class, they too could be profitably rented out to folks that could not afford a home to buy / had credit issues in qualifying for a loan. As adjacent areas that were more white collar got more and more expensive people were willing to pay much more these homes than I could have gotten as a percentage of rent. I sold them and did pretty well.


I also know people that own lmany rentals in even poorer areas, and so long as there are jobs and things are not too lawless there are people that are happy to rent thiese homes.

Similrly landlords with a nice mix of multi- unit buildings in an area with good employment can have a predictable cad flow. If you have the capital to own / maintain / staff such an operation it can be very healthy in all but the most unusual economic circumstances.

Peak values for tear downs often did come along with excellent schools, because of the tastes / demographics of folks that did very well financially in recent decades.

Years ago the best schools were associated with areas that had the most prestige, and in Illinois, where local property taxes are the major component of school funding, that remains an important factor. But is far from the only factor, there are similary many areas where tear downs have not been particularly successful. Sometimes it is because the just are too many negatives, of the percentage of new families to old does not lead to the right shift back toward children. Some towns have so much undeveloped land that tear downs are not a factor. In those sorts of areas the kind of shopper that has money to spend is probably driven by factors very different than this associated with a closer in area...

The other night I watched a show about the various zoning and land use boards that govern things around Portland OR and the ballot measures that they played with loosen then re-tighten the rules. Attitudes are shaped by how the question is framed and in a short period of time it shifted so that BOTH measures had majority support at different times...

Right now my gut tells me there are, in general, from coast to coast , lots more people that feel like they have "settled" for an existing home, but given their " dream option" they would want state of the art features for energy and comfort, with giant showers AND super efficient water heaters. Some would be happy to have those things wrapped up in Jetsons like facades, a large portion would prefer something that looks more historically appropriate, and an even larger group just don't care. Oh, btw, everybody expects they'll get the place for a BARGAIN... So if developers even hope to get going on massive developments again they have an insurmountable challenge -- shiny new tech, warm old timey looks, low low prices. And make it close to work and shopping, like close enough so kids can walk someplace safe and inventing enough that when friend come over they too want to walk with you... Not easy to find.

Easiest way for a developer to be a millionaire? start as multi billionaire and work your way down...

Last edited by chet everett; 07-28-2010 at 12:13 PM..
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Old 07-28-2010, 01:44 PM
 
1,989 posts, read 4,458,258 times
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As someone who's been on a house search for two years in an area that has "all the teardown activity," here are my observations:

1. The newer, bigger house in an older area probably is worth more. Until so many of them are built that there is a huge inventory overhang of them and none of them are selling. Then, each new one that gets built is actually driving down the price of the others that exist. There are only so many families that want (or can afford) homes like this. Supply and demand is not kind to development sprees.

2. People who like big new homes probably don't like to live next door to old homes. And people who like older homes probably don't want to live next door to big McMansions (a McMansion next door or across the street is a deal killer for me). So oddly, each detracts from the resale value of the other. Relatively homogenous (size and style wise) appearance would probably be better for everyone.

3. In 20-30 years when anyone goes to sell any of these homes-- new or old-- they will be old and outdated. In fact they will probably be obsolete. The technology that will evolve over the next few decades to make homes energy efficient and livable in the modern lifestyle of 2030 will make the most up-to-date-HGTV geegaws of today look like dinosaurs.

Disclosure: I like old houses.
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Old 07-28-2010, 07:38 PM
 
12,997 posts, read 13,614,409 times
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Quote:
Originally Posted by chet everett View Post
Easiest way for a developer to be a millionaire? start as multi billionaire and work your way down...
lol
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Old 07-28-2010, 07:56 PM
 
Location: Niceville, FL
13,258 posts, read 22,752,433 times
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Hey, it worked for Donald Trump.
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Old 07-28-2010, 09:37 PM
 
Location: Columbia, SC
10,940 posts, read 21,914,344 times
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Maybe in his area but not mine.
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