My Real Estate Search And Conclusions
I had an absolutely exhausting day of home searching over the weekend and I came home frustrated and annoyed. I spent several hours looking at homes in one of the developments characterized as a new development, with over a thousand homes, all stacked on top of each other, with a high rate of foreclosures, short sales, bank owned properties, etc. Furthermore, the community was a community developed a good distance away from downtown. The prices are cheap, so I decided to take a look. My reaction? I wouldn’t pay $100,000 for these houses. Let me tell you why.
If you are a potential real estate buyer in today’s market, you have a great opportunity to find a great property. After my experience this weekend, my advice is to avoid certain communities.
Avoid New Developments Unless They Are In A Great Area
New developments are typically the communities that contain a high rate of foreclosures because most owners do not have a great deal of equity in the homes. The community I toured this past weekend contained over 100 homes on the market.
Focus On Quality
The community I toured was full of the cheapest houses I have ever been inside. I was shocked at how cheap the homes were even if a handful of them had granite counter tops. My first conclusion: granite counter tops does not equate to a quality home.
Furthermore, since the home builders maximized the land they were developing, the homes are right on top of one another. I literally stepped a foot off the back porch of some homes and was already in another yard. Awful.
How To Exploit The Current Buyer’s Market
- Don’t assume that all home prices will rebound – There was a stark difference in the differing communities I visited this past weekend. Both had many homes for sale. One was in a terrible location and had cheap, low quality homes. The other was a great location with high quality homes. I would have nightmares about trying to re-sell a cheap home in a crappy location, even in 5 or 10 years. Gone are the days of everyone getting a home loan. The only people that will want these crappy homes are the people who won’t be getting loans.
- A great house in a great location will be just that in the future – If you are patient and wait for a deal for a home in a great location, you will have a great place to live for as long as you live there, and the area should appreciate as home prices stabilize.
What About Home Builder Stocks?
I will continue to avoid all home builder stocks. Sure, the stock prices are low, but I think they’ll go lower. There is still way too much inventory. Specifically, there is way too much inventory of low quality homes. The number of buyers are decreasing because of higher loan standards and the inventory is growing. This real estate down turn as years to go in certain markets (like mine).
The Search Goes On
I’m going to continue looking for a home in a location that I want to live in. The cheapest option is the cheapest option for a reason, and I have no interest in living in a dump in a location I hate just for the sake of being a homeowner. I’d rather continue to rent and save money.