From selling to buying...balancing need/want and resale

weedyacresSeptember 5, 2013

We are officially on the home stretch to selling our house. We went under contract in July, and just finished the re-inspection of the items we agreed to fix, so contingencies are all officially satisfied and we're just waiting for closing in 2 more months (buyers aren't relocating until then).

Soooo, now we're turning to buying in our new place and I'm not sure whether to buy big or buy medium. Under normal circumstances, we'd probably buy something in the $200-250K range, which would get us a newer 2000-3000 sf place. But we're moving to a small town (population 16,000), while there are houses from $10K to $500K, because it's a place of modest median income, median home price is ~$100K, and demand for houses drops off significantly above $150K.

YTD solds/actives run like this:
25-50K: 22/15
50-75K: 24/31
75-100K: 26/24
100-125K: 25/21
125-150K: 22/13
150-175K: 11/11
175-200K: 6/8
200-225K: 6/6
225-250K: 3/9
250-275K: 4/5
275-300K: 4/12
300-400K: 1/7
400K-500K: 2/7
>500K: 1/1
And some of the higher end stuff sold at significant deductions from list price.

I've been watching the market for a couple years, and while there's significantly more movement this year than there was last year (in 2012 only one house >$200K sold), the stats scare me a bit, in that a $200K house is in the top 10% price-wise, and I worry about our ability to unload a $200-250K house down the road with such a small market.

The problem is that if we stay in the $100-150 "safe" range, the houses are either newish but small (1500 sf) or bigger but old/dated. Neither one would be a house I'd love, but it would be the more practical choice.

So what would you do? Stay conservative and buy a decent house we don't love? Or buy something we love realizing it may be tough to sell later?

In the meantime, we have our not-yet-finished 940 sf, 2-bedroom crash pad that we bought last spring, so we won't go homeless, and aren't thus in a "must buy" rush. But I want to make the wise decision for both sanity and pocketbook.

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I am happy for your contract! You worked hard at it. You know we all want to know what price it took to make it happen.
As far as what size/type of house to move into, I would suggest that you purchase something that you would enjoy and focus less on the resale factor.
Again, congrats on the contract.

    Bookmark   September 6, 2013 at 7:21AM
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You just went through lengthy and difficult to sell. Are you OK with going down that path again? How long do you plan to occupy this home? 10 years may mute the pain of the recent process. 2-4 years maybe not.

    Bookmark   September 6, 2013 at 8:01AM
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Agree with GreenDesigns.

A lot depends on how long you plan to live there.

Have you considered building? Get the home you want, but one that will eventually fall in the "resellable" price range?

    Bookmark   September 6, 2013 at 9:31AM
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One big thing to consider- is there really anything you could love in the higher price ranges either?

    Bookmark   September 6, 2013 at 12:09PM
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NC: I'll tell you after we close. :-)

GreenDesigns: I've sold 3 houses in my life ($120K, 250K, 500K) and every single one of them was lengthy and difficult to sell, as they were all in down markets. I have no idea how long we'll be here. My average tenure in places is about 5 years, with job changes, but this may be different because I own a business here. I definitely won't retire here, though.

I could think of it as a 5-year for thought. Geez that's a long time to live in a place you don't love. It's harder for me than for Mr. Weedy, who could live in a shack as long as it had a garage.

Camlan: Building costs are ~$100/sf. Existing homes run in the $50-70/sf range for most. Even the high-end homes with acreage rarely go over $100/sf. So I think that route would be even less financially smart.

cocontom: Yes, There's some good stuff (newer, spacious, nice finishes) that, from the photos, I think I could love. I obviously need to go inside to make sure, but there is some good housing stock to be had at pretty darn good prices (i.e.,

    Bookmark   September 6, 2013 at 12:54PM
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Well, after much back and forth with Mr. Weedy, we've decided (for now) to hole up in "Little Beau" (the small house we're fixing up) and look to get a deal on the bigger house we'll both love. If we buy at a decent discount, then we'll be able to afford to sell at a discount later if needed. That may be in the form of a fixer that we can make into a $200K house, or a $250K house we get for $200K.

I saw a few houses with a couple realtors, and one was pointing me towards "try out this 'safe' house and if you don't like it, turn it into a rental." But given the illiquidity of real estate, I'm not sure we want to start investing in rentals just yet. Our lives have been altogether too cluttered with houses the past few years, and we're ready to simplify and relax for a bit.

Thanks for your input.

    Bookmark   September 9, 2013 at 3:34PM
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I wanted to chime in to say I'm glad you sold that house! Two of my four house sales have been ordeals, so I feel for you. The $200K range seems like a good one in your market from what you've said. Good luck to you!

    Bookmark   September 10, 2013 at 11:06AM
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If you're only going to be in a house 5 years, then buy medium with an eye towards resale. You don't know what the market will be like down the road, and people are moving toward smaller homes in general.

    Bookmark   September 10, 2013 at 4:37PM
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I live in an area a lot like the one you're moving to. Houses here are taking a long time to sell at all price levels but my realtor told me she'd much rather have a dozen moderately priced homes than one high dollar house in her inventory. There just aren't that many people already living here who can afford a house that's over $150,000 so she has to rely on selling to folks who are new to the area. And, because a large-ish city is only a half hour's drive away, many of them opt to live there because of the social and cultural options that you just won't find in a small town.

You said at least one of the houses you were looking at was on a lake ... that's the one exception to selling at the upper end of our market. Nicely appointed lake properties go for a lot more money and seem to move pretty fast.

    Bookmark   September 15, 2013 at 2:03PM
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Congratulations on getting the contract. I hope everything goes smoothly at settlement.

If I were in your shoes I would try to live in Little Beau for at least two years to get the tax break.

    Bookmark   September 16, 2013 at 7:47AM
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