WTH?

I think desertdance purchased a foreclosure home that was a custom build by the previous owner. I have been in some high end custom homes that were foreclosed on and can relate to that.

myhappyspace, not rocket science, custom homes reflect the tastes of the person who hires the contractor.

These personal tastes may not translate into a future sale. Custom homes also have no comps. There is nothing to compare them to, so that is a huge issue on resale, as is neighborhood.

We bought one of these custom homes as a short sale, and yep, we paid less, but we are now trying to figure out how to knock down those custom walls to make the home normal.

We bought it for the views, but did not expect the nightmares within. The builder/owner (we learned from neighbors) lost the home to drugs. We can see the weirdness in construction, and we would have never paid full price for this place!

Just saying...

Not all unique houses are poorly executed. But their unique qualities can limit the market for them, it's true. Even houses by geniuses like Frank Lloyd Wright or Louis Kahn may take a while to sell because the people interested living in such houses come from a smaller pool.

I am not sure why you bought a house that you don't think is "normal" though...no discount would be large enough to make be buy a house that I didn't at least like on some primary level (?)

Why buy a house one doesn't love? Life is too short and there are too many other houses.

"If you do go custom, think about resale."

If you think about resale, don't go custom.

This thread is weird.

By and large, custom homes cannot be justified on economics. Not in their execution and not in resale. I recall my GC referring to high end projects as "vanity builds". Made me wince, but he is right. Some, of course, more than others.

I don't know this person or their details but it sounds like they bought a house they thought has "only" cosmetic flaws but now realize how costly it will be to fix it the way they want? Unless one is steeped in this it can come as a surprise im sure.

Hah! We called it the "R" word and architect was not allowed to speak of it. We were not going to spend our precious $$ on building a home that some future owner might like. We built it to meet our needs. And as I told DH, who the heck knows what buyers will be looking for in 15 or 20 years? I mean the very desirable exec. homes of the 80s became anathema in the 00's because, god forbid, they didn't have 2 story foyers or walk in closets in each bedroom. And the required fireplace in the master of the 90s went out the window shortly thereafter. And given how the economy is going, the mc mansion may soon be a "tear down" so someone can build small and affordable.

So build for yourself...there's nothing that can't be changed by the next owner.

Build your dream house . . . but temper it with some reality.

Perhaps you hate to cook. You still need more than a kitchenette with a dorm fridge and a coffee pot. Perhaps you don't plan to have children. You should still build at least three bedrooms. These are just common sense things.

And it makes sense to build any house with an eye towards potential additions in the future. We're building a retirement house on family land, which I hope will never be sold. We're building a small cottage-type house, BUT we're taking care to choose a plan that can easily be "added onto" in the future. If one of our daughters inherits it in the future, and she has a dozen children, we'll be leaving her a house that can have a hallway added at the other side of the greatroom, which can lead to more bedrooms. The attic and garage, too, will provide space for another room, if they should need it -- they'll have ample space to add another, detached garage.

As for finishes and specifics, I don't really care whether my girls like them or not. I anticipate living in this house 40 years or so -- then going straight to the graveyard. In all likelihood I'll make some changes in those years: Replace a toilet, add a window, whatever. If my girls aren't happy with the house when they inherit it, it'll probably be time for an overhaul anyway.

You will never be able to convince the builders of ultra custom homes that they may have to sell some day. And if they do have to sell, you will never be able to convince them that their personalized, expensive upgrades are not as valuable as they perceive them to be,

Nothing wrong with that mindset unless a bank or heirs end up paying for a shortfall.

The problem stems from the notion that a house is a growth investment that should yield profits. A house is a place to live, and like anything that gets used, it does physically depreciate, in reality.

Exactly, Pal.

It galls me that contractors and realtors have co-opted the term "investment" to describe spending 100,000 on a kitchen that will increase the value of your home by 80,000 ... if you are lucky, and only on day 1.

Balderdash.

Houses are physical structures, they deteriorate, depreciate and become obsolete. It is only the land they sit on that typically appreciates (excepting hyper inflationary environments).

However, for most everyday folks a mortgage is the only way to get financial leverage. As we have seen, that can go both ways!

We're building a house that has some idiosyncrasies that will not appeal to everyone (attached art studio, only 2 bedrooms, smallish bathrooms and kitchen, lots of built-ins.) We hope it is our forever house, so it will be our heirs re-selling it and not us, but you never know. If it ends up being worth less than what we put into it, so what? It's our money. It will be paid for by the time we move in. Other people buy expensive cars or take expensive trips...

It galls me that we must build to suit zoning, historical district, HOA, etc, regulations. And there are lots of code provisions that have nothing to with basic health and safety-- even though that is used as legal justification for them. There is no end of others who dictate what we must do. And those regulations will be more stringent next year- and even more the year after that.
I would suggest that resale considerations are important to me and I did some things on my build to help with that. But it was a choice that I MADE-- not decreed by others.

Don't say that mtnrd!

My gf is badly in need of a new kitchen and her husband (moths fly out of his wallet when he opens it) thinks what they have is just fine. I'm trying to get her to convince him that a new kitchen is an investment not gasp! spending money!

Fortunately, he doesn't read these threads!

I've got my fingers crossed that everyone can be happy if we can find the right kitchen at green demolitions....

Investing in your house is investing in your own comfort and well being, and there is nothing the matter with that.

How good of an investment is eating at an upscale restaurant? You may spend $50-$100-whatever only to poop it out the next day, to put it bluntly. That's not much of a return when you could meet your basic nutritional requirements for a few dollars a day. Yet people do this regularly. And buy Much nicer cars than absolutely necessary--and cars are an awful investment.

For a majority of people it probably makes more sense to rent, but not having a house of one's own is not very satisfying for most people. The "investment" is in quality of life.

Pal is right. It's (almost) always cheaper to rent than to buy... but then there are restrictions on what can/cannot be done, and people don't want to "throw their money away on rent" when it could be going toward principal. Most people want what they want - and those that do, should never buy in an HOA restricted neighborhood. Just because "you" think it's gorgeous and will increase property values, doesn't mean everyone else will think it's gorgeous and will increase property values.

There is a foreclosed fugly house in our neighborhood. Developer let some things slide through - others the owner had builder do without getting approved, or made changes during construction. A battle that is still ongoing with numerous items that must be corrected by the purchaser. It's fugly outside. It's fugly inside. No one is ever going to buy it (at half of what it was built for) with other options available. But I disgress...

We were in our last home 20+ years and plan on staying here just as long. But you never know what will happen. The housing market is different now. It's still an investment, but one you won't necessarily make money on. It really is an investment in quality of life, what you want and how you want to live.

I'll compare it to having custom mirrors made for several of our bathrooms - when you break it down, it's pennies a day. At least that's how I justify spending more on a mirror than I could (should?). But then I can take the mirrors with me when I move.

This post was edited by allison0704 on Sat, Apr 27, 13 at 16:47

Hey, I am all about spending to make your environment pleasant, no doubt.

But the industry coops the word "investment" in a true "dollars and cents" sense. And its the biggest investment/expenditure most people make. And as we know, many of them get in way over the head because they believe it is an "investment qua investment".

I don't see people getting in financial trouble over "investing" in fine dining, travel. etc ...

I don't think we disagree. We all think that spending money (and time!) on one's surroundings is satisfying. But in the truest accounting, most of what we do is expenditure not investment. Especially at the higher end.

I know a fair number of people who are in financial trouble because of fine dining, clothes, and travel expenditures. (Like tens of thousands in debt, which is a lot when you don't have it).

But we agree. I don't think that beyond the dirt that a house sits on that it is much of an investment, and the dirt is only an investment where there is actual value in the real estate.

When I went to insure my new house, I wanted replacement value coverage like my parents have. I used their agent, who called me and said "This is a bit hard to determine, because really, that house is hardly worth anything compared to what you paid for it". My parents live in an area where the value of the house tends to be in the house, and land is cheap.

I think there is another factor at play in this age, and that is the heightened sense of entitlement. People don't want to live in the types of houses that they can afford, they want to live in more than they can afford. And outside some obviously very expensive markets, I think it is possible for a lot of people to live in something they could afford.

All of my parents friends lived in fairly "normal" houses by today's standards, and my parents' friends were doctors, lawyers and high level executives. The houses may have been a bit larger than average of the day, and were definitely better decorated, but all in all they were not lavish. The people that live in houses of this sort today are very middle class and the doctors and lawyers and executives live in the puffed up, ostentatious (although pretty cheaply constructed) houses.

I am an over-improver and an over customizer, but it has always been in Less house than I could afford, so although I tend to lose money at the end of the day, it was discretionary spending. I've not lost money to the bank.

RE: "It's always cheaper to rent than buy" - Yeah, well... that's probably true for most on this forum, who live in expensive homes, but it doesn't necessarily apply to the many, many of us who live in very small, plain Jane modest homes in the parts of the country where it is truly far, far cheaper to live in a (little) house than it does to rent - even if you add in all expenses, and throw in a LOT of repairs and renovations/upgrades! If and when I sell, I surely won't get any of it back, but if I compare what it would cost to rent, at least I haven't lost in that respect...

"Pal is right. It's always cheaper to rent than to buy... "

Nope... not always!
It is actually cheaper to buy in my area.

It's even cheaper to live in my neighborhood in many instances than it is to rent. If you manage to save up the $100,000 for the down payment.

Maybe I stand corrected, but you would have to be comparing apples to apples.

I wasn't arguing with you, mtnrdredux. I agree on most of what you said in your last post too - but the part about people not getting into money troubles for traveling, dining out, etc. For those that do get into financial troubles, imo it depends on their vice.

The sense of entitlement is what got a lot of people into foreclosure and bankruptcy. You just can't live above your means and never expect the sky to fall. Add to that the housing crunch and financial woes. Bad news for many. And that's sad, but hey, there are consequences to actions.

Not that everyone mismanaged. DS got a great deal on a Chicago condo, and at a great price - at the time. Who thought prices would drop even further? He will get back what he owes plus some, but not his entire down payment (which was high). But he will survive because he lives within his means and doesn't have a sense of entitlement.

" If you manage to save up the $100,000 for the down payment."

LOL!
Not the case here in the western part of PA!

Case in point...
when my son got engaged in 2010, he and the soon-to-be-Mrs went apartment hunting.
They found that they could buy a 3 bedroom house for LESS than renting a 1 BR apt.
So they bought a house, as newlyweds, with just 5% down.

Which is very, very common around here, as rentals are rare and with waiting lists, while older stock houses are cheap.

Oh, I know. I am from northwestern PA where values are even lower. The most expensive house in the town I grew up in, a 1920s Tudor Revival, is as expensive as the cheapest house in my neighborhood, which would fit in it's garage more than once.

That's why I said "even in my neighborhood, if . . " People seem to love to dissect part of a sentence or thought out, just so they can disagree with it.

Not even economists agree, but some do insist that it is still cheaper for many (not all) people to rent Over One's Lifetime, given a down payment and given the fact that renters do not update or pay for capital maintenance or repairs like new roof, siding, windows and HVAC. (They may indirectly , but not per individual) My sister's former, inexpensive to purchase house cost her a year's salary to re-roof, side, and put in vinyl replacement windows...nothing fancy, and she never did replace the inefficient furnace or put in central air.

Because of the low housing prices it is questionable what the return on this investment would be. At the lowest end of the scale, unfortunately, the poorest pay relatively high rents for relatively inferior properties in bad neighborhoods--that's been well established.

I once visited a newly built 2 million dollar fugly of a business associate not a friend, I like that word fugly, he showed me the $25000.00 walkway he designed himself connecting the indoor pool to the master bedroom. It was a steel bridge with a image of Europe on the right connecting with America to the left. I thought what the ....... He loved it and I wasn't about to break his bubble, he made his money the hard way, he earned it. He lived in a neighborhood that included a Rock Star and a State Senator. Well that 2 million dollar house is for sale not because of his financial position but his retirement plans.

It can not be sold.

From the walkway across the ocean to the replica of the Roman Forum on the grounds it just is not what someone else's vision is of a 2 million dollar home.

I have seen friends build or remodel dream homes without the services of a designer and they look like they were designed on a napkin, and some were. I have asked them, are you keeping this place forever? And have been brutally honest as I have also said you had better keep it forever because you will never sell it. Some was easy come easy go money, some was hard earned.

Money and taste do not go hand in hand.

I think that's what this thread is about, not really sure, it is strange to say the least.

The question of rent vs. buy is a function of the prices of real estate at the time of purchase and sale. DH's grandparents paid $5k for the property our house is on back in the 1930s which is just a small fraction of what we now pay each year in taxes just to own the place. But for those who bought homes in 2005 at the peak, their hopes of seeing that money grow to something above what they paid is a very long term prospect indeed.

For most of the last 70 years though, not owning in general, was a costly choice as it was a time of super-escalating house prices. The video below gives a fascinating look at house prices over the decades.

Here is a link that might be useful: Real estate roller coaster

What very few people take into account though, is what you Actually Pay for the house over the Life of the Loan.

Even at the current very low interest rate I will pay almost twice the cash purchase price of my house over the thirty year mortgage.

People seem to love to dissect part of a sentence or thought out, just so they can disagree with it.

Or twist words. I'd have to say my favorite is trying to tell someone what they meant. The mind readers. lol

SC, my neighborhood's fugly house is a 2M$ deal as well, built without a bridge to its pool. lol It's not over built and isn't the most expensive house here. But it is by far the fugliest.

Looking at it simply, you can say, well I can pay $x/month in rent or $x/month in mortgage. At the end, if you own, you will have an asset to sell...if you rent, then you don't. Either way, there is a certain amount of "service" you receive from having a place to live. And that "service" will have a cost whether you rent or buy. It's not that there is no cost to maintaining a rental unit...it's that the cost of maintenance is spread out over the term of the lease. If the rent doesn't cover the replacement cost of a roof and a furnace, etc. then the landlord won't be in business very long.

But in reality, those are 2 separate decisions: The choice to invest your capital in real estate vs. another investment, and then the choice to finance or not finance that investment...no different than using cash to buy stock or buying stock on margin. The big difference in an appreciating real estate market is the amount of leverage you can gain for your down payment. You can put $30k down on a $300k house, and if the value rises by 10% in a year, you've made your downpayment back as the value of the appreciating asset is 10x the value of your investment. By renting, you have no such opportunity to lever the asset you're living in.

Other elements to the decision should include tax impact such as the deductibility of a mortgage and property taxes, as well as the ability to do things like paint, or hang pictures....

...edited.

This post was edited by allison0704 on Sun, Apr 28, 13 at 17:05

I was talking in general about the rent/buy decision for choosing a residence. Commercial real estate is a whole 'nother thing on a whole different economic cycle....

I like this rent v. buy calculator on the Times site, linked below.

It generally takes some time for buying to be a better investment than renting, and I think that people often mistakenly believe the "throwing away money on rent" argument and don't account for all of the hidden costs of owning. I'm not speaking of posters here, to be clear, but I do think that these things start to sound like truisms that aren't necessarily true. I'll never forget that, when I was buying a condo in a "booming" market, a potential lender told me that I should opt for interest-only monthly payments because "real" equity came from the increased market value. (Thankfully I didn't listen to him and was very luck to not lose too much after the crash.)

I have the same viewpoint, I think, as pal and mtn and others -- while I hope that my home's equity increases over the years, I've bought it largely because I want it, and not because I think it's the best (financial) investment I can make.

Here is a link that might be useful: NYTimes Rent v. Buy Calculator

Where I live, housing, in general, is cheap. Especially compared to many on these boards. I rented for many years because it was cheap to do so and, as a single woman, I didn't really want to deal with the maintenance. I had a two bedroom apartment with an eat in kitchen, a separate dining room and a full attic in a well established neighborhood for $575/month. I decided to buy a home because, after working and traveling in much higher real estate markets, I figured that even if I decided to pull up stakes one day, I could keep my home as a summer home.

The home I bought is a fairly large house in a transitional neighborhood that is just beginning a revitalization. Even with helping the previous owner to be able to sell, the final purchase price came out to be less than $18/sq. ft. Using my VA benefit, I bought with zero money down and didn't have to bring one dime to closing. My mortgage is over $150 less than I was paying in rent. Partly because I absolutely love my home, I have decided this is my forever home so I am making changes to make it more functional for me. However, because it's over a hundred years old, I'm very mindful not to change the original character of the home.

To tie this back to the original post, if I were building a home today, I would design the structure to represent the current period, as much as possible, and the design/decor of the rooms would reflect my tastes. Not necessarily for future resale but because when I think about what I love about old houses is that they are a reflection of the period in which they were built and that is what makes them charming. I would look for ways to reflect this period in the structure of a new build, using the best materials I could afford, and save my wacky design aesthetic for things that can be painted over or thrown away.