Looking for appreciation in house bought for retirement (pension, divorce, spouse)
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Was the offer accepted? Did you check the taxes on the property? No Prop 13 in AZ. Electricity is not cheap either. What size home did you settle on?
We purchased in Fla 10 years ago and we came from SoCAL. Our home in SoCAL appreciated 200% (So we sold it for 3 x what we paid, after 12 years). But it is not like that these days. I expected a property purchase in Fla to be a 10 year problem (AKA it would not make any money for 10 years). We have been in it for 10 years in December this year and it is currently up 25%. So ~2.5%pa. Not a great investment. But it has been relatively low maintenance. Painted it once, replace one of the 2 AC units. I do a lot of the maintenance myself so that helps.
We’ve been shopping for a second, “retirement” home in Scottsdale, Arizona. The area was chosen for livability and for similarity in terms of services offered to where we currently live in Silicon Valley.
There are currently 3500 homes listed for sale here. Worse, Scottsdale is not completely built out with SFHs the way our area is. If you look at historical prices paid on a variety of properties, it seems that few will make any money when they sell. Some take a loss.
I’m not sure how I feel about this. I’ve never bought a property without a reasonable expectation of gain in the long run. I don’t expect the crazy price increases we get at home, where there’s a shortage of houses. But we both like the area and the house styles.
What would you do? Would you just decide you won’t care if the new house never appreciates in value?
I would care about appreciation. Life sends crazy curves, so it's possible you'd have to sell it one day. Or get a mortgage on it. It's less important than when you're young, but appreciation is always desirable. Also because if you have to sell, it's important that there be people who want to buy it.
But you can't know what it will be like in the future, can you? Baby boomers are retiring. A lot of them move to AZ, don't they?
Very true, as we insisted on a non-HOA property. So we save a little money there and DH gets to put up his ham radio tower.
I am a little more comfortable on the appreciation angle on this property, as it is a relatively short distance (15 minutes) to Scottsdale shopping and 20 minutes to the Mayo Clinic. I've heard that some of the people who bought waaaay out in the northern-most part of North Scottsdale (where some of the roads are still dirt) are selling up and moving closer to town. We'll have city water and sewer, as well as natural gas. That wasn't the case with any of the other properties we looked at. The other houses all had electric heating (!), several had septic tanks and one actually had to have water hauled in. Wells are not uncommon here either.
Sounds like a brilliant purchase - all of the things I would have looked for, too. Learned the hard way how much I hate HOAs. Bought a condo and sold it the very next year because of it.
And I also lived on rural properties where I had to put in a well and septic. There can be upsides to that, but life is much easier when you have city utilities.
Seems like the wrong emphasis unless it is not really your last home. So many times people buy homes thinking mostly of resale and not what they really like or want - your last home should be primarily what YOU want. Unless you have absolutely no taste or preferences of your own or are planning on that to finance your healthcare when you're no longer independent.
Quote:
Originally Posted by GeoffD
For a retirement home, I'd be more interested in property taxes and a risk that they could spike than in potential appreciation. I'd hate to buy my retirement home and have it triple in value over a decade with the same tripling of property taxes. I might not be able to afford to live there.
...
These are the kind of responses I expected to see...it was surprising to see that people retiring still would rather be concerned about having a new investment, rather than a place they could see as a final place to call home. For our retirement, we picked the most scenic place with the lowest appreciation we could find to build in, knowing that long term we would never have to worry about housing again. Plus we got what WE wanted to live in- for the first time in our lives.
Really underscores how different we all are!
Last edited by MichiganGreg; 01-27-2018 at 06:43 AM..
Reason: grammar
I think the mindset changes when you are “headed for the last roundup”. We are retired and probably have one more move left in us.
If we move again, we will think nothing about appreciation or what features our buyers will want. We will only think of ourselves and the features we want right now. Only two bedrooms? Sure. Small, low maintenance yard? Yup. Close to shopping and medical care? For sure. High toilets, wide doorways, no stairs, grab bars? All of that.
I think finding the place in the perfect location is more of a concern than appreciation once it is found... BTW you can always install High Toilets at ~$300 a pop. At the most a $1500 problem.
These are the kind of responses I expected to see...it was surprising to see that people retiring still would rather be concerned about having a new investment, rather than a place they could see as a final place to call home. For our retirement, we picked the most scenic place with the lowest appreciation we could find to build in, knowing that long term we would never have to worry about housing again. Plus we got what WE wanted to live in- for the first time in our lives.
Really underscores how different we all are!
You know how sometimes you meet a person who opens your eyes to what is and what can be?
I met someone like that on a 3-week Panama Canal cruise about 17 years ago. I was alone and on day one at dinner, this feisty 80 year old widow "adopted" me. I have never known anyone with as much zest for life as Ginny. She danced with the gentleman companions every day and kept me amused with stories of her late husband. I'd never laughed so much with another person. I didn't realize it then but I badly needed positive female role models. Ginny fit the bill. At an age when many people might be going into assisted living or nursing homes, Ginny had several more cruises planned so she could continue to dance the night away. But first she had to orchestrate her move into the house she'd just bought.
She didn't have self-imposed limits and that made a lasting impression. We corresponded after the cruise for a while and then I went through a horrid time personally and financially. By the time I came out the other side, she was nowhere to be found.
So, no, I'm not thinking about a "final" place because I don't expect it to be final. I'm 64. I fully believe that you manifest (i.e. make real) what which you expect.
For my retirement, I bought bare land and built the house that we wanted. We have no intention of selling.
Same with us.
Our plan in retirement was to do a luxury condo so I didn't have to worry as much about maintenance, but as the saying goes, Man plans and God laughs.
It turns out we prefer larger spaces, so we built a 7500 sf custom home. The great thing about a custom home is you can tailor it to your wants & budget.
Same thing for one of our vacation homes on the ski slopes. We started off with a small condo (3 bedroom/1300 sf), then upsized to a single family home (3800 sf, 4 bedroom/4.5 bath plus a separate mother-in-law unit), and we just closed on a 6500 sf ski-in/ski-out. We wanted to build, but we also wanted ski-in/ski-out. Ultimately we bought a relatively new house (8 years old) that had the attributes we wanted.
The idea that appreciation might drive up property taxes needs to be considered as well. Only in Cali are you "proof" against that (unless that proposition, what is it, prop 13? is repealed)
In 2005, the state Legislature capped property tax increases for residential and commercial properties at 3 percent and 8 percent, respectively. Or at least that’s how it appeared on the surface.
Because of “secondary caps” included in the law that use a complicated tax formula, that increase is expected to be just 0.2 percent for fiscal 2017 year, even as home prices have steadily risen since 2013.
To the everyday home and commercial owners, it means property taxes won’t increase much no matter how much their property appreciates.
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