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Real Estate Update

May 6th, 2017 at 01:51 pm

Our house value has been rather stagnant for 3-4 years at this point. When we moved here (2001) so many people were moving up from So Cal and Bay Area, for the more affordable housing. At the time, the median house price in the Bay Area was $500k. (We thought *that* was absurd). Now? $1 mil! $1 mil-ish, if you just want to buy a small starter home.

& so I have been wondering why things are so stagnant here. I know that was really instrumental in the housing bubble, regionally. Not that we need another housing bubble, but I would expect a little more growth. I guess I have mixed feelings about it all. I do like that housing is more in line with wages and people are being more prudent.

In the end, I saw an article last week that so many people are moving here that we should be building an extra 2,000 homes per year. So I guess it's happening. I just haven't seen it so much myself, and home prices seem to be left in check.

I also got a flyer from a local real estate agent and it listed that a 3-bedroom house (down the street) sold for $450,000. What in the heck!? I figured that must have been a typo or it must have been one of the bigger houses which have been selling at that price point, but I looked it up out of curiosity. Indeed, the largest home model on our block and the smallest home model just both sold for the same price. WOW!

I have to back up a bit though. It's funny when I look back and some of the most ridiculous splurges in our family have ended up being the best long-term investments. & it's not like these purchases were made with any regard to long-term investments or making money. It was just about ridiculous splurging. So, our home is the perfect example of this. We changed cities to lower our housing costs by 70%. The housing seemed so cheap to us, that we decided we would buy a home with space for a movie theater. In the end, the price was an even trade for our Bay Area condo. (We didn't even spend any more money to get the theater space).

The sole purpose of this purchase was "ridiculous splurge". The End. But, we ended up only paying pennies for the extra space. The reason is because land is so expensive here that land is the primary driving cost of housing. If you buy a larger two story house, it's not going to cost a lot more. I've said before, but our first floor cost $130 per square foot. The second floor only cost $35 per square foot. Seriously!

We did buy new construction, which is a lot of why we got such a substantial discount on our home. On the open market, our house had never fetched less than a $100,000 premium over the smaller models, so this was obviously an immediate financial gain we received for going bigger. & of course, bigger was better during the boom. At the peak, our home could fetch an additional $200,000 over the single story homes.

As our house prices have stagnated, I have noticed the trend of increasing values of smaller homes. It's clear that people are buying what they can actually afford, and maybe even embracing that more is not always better.

For the most part, we weren't planning to sell for another 6 years minimum, so it will be interesting to see where things head. A lot can change in 6 years. I expect the market to eventually adjust and allow some benefit for bigger homes, even if it's just a very small premium. I expect that we will see some movement on our home value this summer. Will see.

The other interesting thing is that our house is still a solid $200,000 below the housing bubble peak. The peak is nothing I expect to get back to before we sell. It was pretty absurd in our region. But it just hit me that the single stories in our neighborhood have hit peak levels. Amazing!

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