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Home >> Stock Forums >> Size Matters

Size Matters

Mr. Gekko said: "Well, I asked for the return of the Real Estate forum and I got it. Maybe next time I should ask Darren for money. Anyway, I have a question regarding the size of property and the difference in value. When real estate values go up, would there be a major percentage difference between a luxury home and an average 3 bedroom, 2 bath house? Meaning, would one property increase more than the other? What about when prices fall? I'm sure location would be a factor."

thezster said: "That's a very good question - and I've been thinking of my own experiences in that arena.... I've bought/sold 7 homes in the last 5 years... ranging from 2000sq.ft. to 4500sq.ft. - $175K - $450K (price did not follow sq. footage, by the way - my biggest house sold for the third lowest price... and my smallest house is the most expensive). I've been lucky - and made a nice profit on each of them.... but - if I think about it long and hard, I can't determine a difference on the return based on size - but almost exclusively on location/condition/and regional market fluctuations...."

FirefighterB said: "Location, location, location REALLY is the truth. Another adage I always heard from investors and agents is that buying the crappiest/smallest/cheapest house in the neighborhood is the best bet. Chances are the better properties will drag the value up of the good ones and that you'll be in a better position to offer someone an "affordable" place in the neighborhood that they want, over owning the Goliath in the neighborhood and hoping that the little guys stay in line."

Heather said: "There for a minute I thought I was looking at my inbox -LOL!"

fumoney said: "Im close to the water in floridas west coast. Weve taken it in the ass as far as the real estate market. W/IN the past year, our market has declined drastically due to the "snowbird" or seasonal aspect of the area. The taxes went up drastically, insurance rates have tripled or more in some of the coastline cities. The people that are seasonal have the "screw this shit" attitude, and are selling as well are the many of the lower income families. Many are moving out of state. The economy has been rough this year with all the increases. Very little seasonal money came into the area compared to recent years. Example, my taxes went from 3k per year to 5k per year, and insurance went from 24hundred to 46hundred........I can afford the increase altho it pisses me off that 350 extra per month could be going toward my retirement.:angry:"

Kloewer said: "[QUOTE=fumoney]Im close to the water in floridas west coast. Weve taken it in the ass as far as the real estate market. W/IN the past year, our market has declined drastically due to the "snowbird" or seasonal aspect of the area. The taxes went up drastically, insurance rates have tripled or more in some of the coastline cities. The people that are seasonal have the "screw this shit" attitude, and are selling as well are the many of the lower income families. Many are moving out of state.[/QUOTE] I don't blame the snowbirds for ditching Florida. Thanks to its dual-rate tax structure, part-time residents can pay 1000% higher property taxes than year-round residents. And they don't even use the state's services most of the year. It's another example of politicians buying votes (in this case by shifting the tax burden to out-of-staters who can't vote in Florida elections) and idiot constituencies blindly playing along."

Mr. Gekko said: "[QUOTE=thezster]That's a very good question - and I've been thinking of my own experiences in that arena.... I've bought/sold 7 homes in the last 5 years... ranging from 2000sq.ft. to 4500sq.ft. - $175K - $450K (price did not follow sq. footage, by the way - my biggest house sold for the third lowest price... and my smallest house is the most expensive). I've been lucky - and made a nice profit on each of them.... but - if I think about it long and hard, I can't determine a difference on the return based on size - but almost exclusively on location/condition/and regional market fluctuations....[/QUOTE] That basically answers my question then. I do have the say though, at first thought one (or at least me) would think that the luxury home would have more to gain. But, apparently that isn't so."

Mr. Gekko said: "[QUOTE=FirefighterB]Location, location, location REALLY is the truth. Another adage I always heard from investors and agents is that buying the crappiest/smallest/cheapest house in the neighborhood is the best bet. Chances are the better properties will drag the value up of the good ones and that you'll be in a better position to offer someone an "affordable" place in the neighborhood that they want, over owning the Goliath in the neighborhood and hoping that the little guys stay in line.[/QUOTE] I think you're right. But, in my area it most work the other way around. There is a new subdivision about a mile up the road from me. It's being built by local contractor and is a upscale neighborhood. The houses start at (or did) $800,000. The funny thing is, the subdivision sits right under a flight path for an airport 4 miles away and there's an industrial park just outback. The closest building is a truck terminal. Now, a few miles in the opposite direction there's a Toll Brothers subdivision that was just completed. It's completely away from the flight path and has nothing but farm field surrounding it. The houses there start at $500,000. Of course you were referring to existing neighborhoods and I'm talking about new subdivisions. Still, it's a little ass backwards."

scottlarock said: "One thought, is to always remember to never buy a house that backsup to or opens to a major road unless you are hoping one day it will become commercial property! Cause when that road turns from 2 lanes into 6, you'll have cars driving on your driveway practically. The other thing to remember is that open farm land eventually turns into some building. So, the scary part is that you NEVER know what might end up on that open farm land. Could be a wal-mart, could be a chemical plant. Always good to backup to other subdivisions or to land/areas like marshlands/forest/mountains/water etc. oh yes, and I think the real estate market is going to drop for the next 2 years. Others seems to agree. It might be better to buy now if you need a place to live, but I don't know about buying investments right now. Who knows, only time will tell ;)"

AlfredSokol said: "It seems like areas with excess inventory of newly built houses will stay in decline for the future. With this credit crunch thats going on, it could get even worse."

Mr. Gekko said: "[QUOTE=AlfredSokol]It seems like areas with excess inventory of newly built houses will stay in decline for the future. With this credit crunch thats going on, it could get even worse.[/QUOTE] I agree. My parents have a friend that's a real estate agent. She's struggling and expects to for the coming year or so."

scottlarock said: "[url]http://videoplayer.thestreet.com/?clipId=1373_10371050&channel=Cramer+On+Demand&cm_ven=&cm_cat=&cm_ite=&puc=htmlatb&ts=1185853215828&bt=NS&bp=WIN&bst=FF&biec=false&format=flash&bitrate=300[/url] Cramer agrees. However, if you COULD have bought a house for 200k, at this moment and it declines to 170k over the next 3 years. You could also have rented and spent 15-20k a year renting. Which NONE of that would come back to your pocket, guaranteed."

AlfredSokol said: "Agreed. Buying a home in the end is always a good deal. Unless you buy and sell at exactly the wrong moments. Sometimes life forces people to do that."