Tuesday, November 27, 2007

To build, to fix, or to merely live

As mentioned in an earlier post, how we think about housing can really shape our actions. At my current stage in life, I see a house as the place I want to raise my young family not as an investment opportunity.

As a mom I am fortunate to work for a flexible company and still make good money. Why is this relevant? Its relevant because I don't think any home project will produce a return equivalent to my hourly wage. In economic speak, fixing or building a house is not worth the opportunity cost of my time. I highly value the time I have with my family and don't want to give that up to work on a house (We already fixed up one house, and I am not willing to do that right now. As discussed when we were looking at a serious fixer this summer).

So for right now, a move-in, or near-move in condition home is what I am looking for even though we aren't likely to find everything on our wish list. I know Mr. BT would love to build a custom home (his family has extensive construction experience). Once the kids are grown and want nothing to do with us, I would be willing to build a home to spend the rest of our days in.

Here are the pros and cons associated with the different strategies:

To Build:
In general building custom is cheaper than buying custom. You get exactly what you want and are willing to pay for. Not much control over how the neighborhood turns out. Very time intensive. Managing contractors can be frustrating and picking out all the trimmings can be a bit overwhelming.

To Fix:
You get closer to what you want for less $$. an be time intensive.

To Merely Live (move-in condition):
You pay more, but you are not spending nights and weekends working on the house or managing contractors. You aren't likely to get exactly what you want. You have a pretty good idea how the neighborhood will age.

17 comments:

Gwynster said...

Maybe I'm weird but I can't wait to have a house to work on again but we wouldn't be approaching it from the "investment" angle. No house will be perfect for us so anything fixed up already is just a waste. House projects are fun for us and we'd be making the house into a home we'd living in for the next 20 to 30 years until we retire.

But I don't have small children which makes a huge difference. I don't know people with kids manage to even brush their teeth in peace, let alone do basic home maintenance. If I had kids, I'd just let the projects wait awhile until they were older and needed less direct supervision.

That said, working on a house with children is a great idea once they are old enough. Talk about directly teaching a child important practical skills! The reason Mr. Gwynster learned half the things he know is because he learned them from his father.

You may be missing some good life lesson about caring for personal property and community.

Patient Renter said...

I think children is the key, which Gwyn hit on. I'm sure many people would love to fix up a house themselves, but time is priceless when you have young kids. I like the idea of fixing a place up with your kids too (I got some of this with my pops), if they're older.

sacramentia said...

working on houses can't possibly pay any less than blogging.

Buying Time said...

Dont' get me wrong, I really enjoyed working on our last house...home projects and gardening give a visible sense of accomplishment that you can't really get from today's office jobs.

That is actually how Mr. BT spent much of his childhood, working on projects with his dad. It has made him super handy around the house. We have a project car...a '68 Dodge Charger since he always has to have something to work on =)

I agree, when the kids are older, its a much better way to spend time together....and much more productive than computer games or tv shows!

big and rich said...

Just buy a dam house please. You are never going to pick a bottom.Face it, a lot of you were on the wrong side of the trade as they say.Look at all the time you have wasted with this housing crap.You should have left the state a long time ago and bought a house in an affordable area.California is way overstretched financially.Get the hell out of dodge why you can.

smf said...

"Just buy a dam house please"

Been there, done that, twice. Hoping to move up soon to a bigger house.

"You are never going to pick a bottom."

But the closer we get to it, the more money we will eventually save.

"Face it, a lot of you were on the wrong side of the trade as they say"

Bought my house in 94 for $115K. Sold it in 03 for $245K. You were saying...

"Look at all the time you have wasted with this housing crap"

A LOT better than wasting $$$ on the overpriced homes now, wouldn't you say?

"You should have left the state a long time ago and bought a house in an affordable area"

There are affordable areas left? (The bubble was not local, read the news)

"California is way overstretched financially."

Because government idiots figured that the .com and housing bubble bonanza were going to last forever.

"Get the hell out of dodge why you can."

Why?

big and rich said...

Well I have to hand it to you smf, you do a job at analyzing the situation.
You are right about some things but I guess it is all up to debate.California is going down the tubes.Bunch of darelicts in control.

sacramentia said...

California is not going down the tubes!! The derelicts in control do tend to confuse the success of the entrepreneurial spirit in California with their public policy actions. But when the non-sense gets the attention of the people, we put them in check. (prop13, recall of davis).

The internet business is alive and well - have you checked Google stock lately? The wealth they have created puts A LOT of money in the state coffers.

Check out green energy startups and where they are located - we are in for another great run.

Things suck right now - but we still have California weather and all the amenities, and the best system in the world for funding and innovating new technologies.

smf said...

"California is not going down the tubes!!"

Applicable only if the bubble had been local, but it wasn't. Overall we have no intention of moving out.

Those who have sometimes are related to the construction industry. They are trying to find construction jobs that are no longer needed here. What will they do when they start drying up?

Sold in '05 said...

Sorry, this is a little off topic right now, but can anyone explain why the sales price listed on SacBee's MLS would be WAY higher than the assessed value on the tax bill for new homes being built and sold in the WestPark development in Roseville? The MLS vs tax bill is showing almost $200000 difference for several homes in Lennar's Laureate sub. Do the incentives the builders give not show on MLS? Are the tax bills reflecting the "true" sale prices? Anyone?

sacramentia said...

I'd ask the builder and then call the assessor. I've found them very happy to explain things like that. good luck and if you make the call - please share what you find.

smf - if I were in the trades I'd become THE guy for green energy retrofit construction, educate myself on how to sell the stuff.
plumber = solar water heater
roofer - solar panels
electrician - all of the above
framer - see roofer.

This stuff is getting cheap enough to provide a real payoff. 5-7 return on your money, rebates, etc...

It won't happen overnight, and we have a long, painful adjustment period starting, but if you look statistically at recessions they are a couple percentage points of decline in GDP.

And like most economic scenarios we always pay attention to the outliers that set the price instead of the 97% of the economy that is still doing ok.

sacramentia said...

California is not going down the tubes!! The derelicts in control do tend to confuse the success of the entrepreneurial spirit in California with their public policy actions. But when the non-sense gets the attention of the people, we put them in check. (prop13, recall of davis).

The internet business is alive and well - have you checked Google stock lately? The wealth they have created puts A LOT of money in the state coffers.

Check out green energy startups and where they are located - we are in for another great run.

Things suck right now - but we still have California weather and all the amenities, and the best system in the world for funding and innovating new technologies.

sacramentia said...

what the heck is wrong with my posting? i must be a bogging knucklehead??

Cmyst said...

I've owned 4 houses. Of the 4, the only ones that ever got improved to any degree were the first 2, when I was young and home with the kids and before the personal computer became a household icon. When I bought my condo, I had big plans and none of them came to fruition. My goal now is to buy a place that is as close to being perfect as possible, but I'm feeling a lot better about reasonable rehab projects after watching so many home improvement shows and listening to you all.

Lander said...

You're getting some attention.

Gwynster said...

I saw that Lander, nice cudos for Buying >; )

And Daniel can almost write anything after his piece on the changing environment in Davis. Davis has been in a world of denial. We got our 5th SFR REO yesterday where the MLS description actually says "bank-owned" instead of trying to pretend it's a normal sale.

Buying Time said...

Thanks for the heads up Lander...I don't know how you manage to stay on top of all this!

I have to admit, I kinda precipitated it....I had written thanking him for his coverage the other day from a buyers point of view....since very few in the MSM do that (found the story on your blog =)