What Makes a House Recession-Proof?

What makes a house recession-proof? MSN Money says that good homes sell even in a bad market. They then detail what they consider to be a "good home." Their list and my comments:

Location -- You've heard it before because it's true: Location matters. It matters most, in fact, when it comes to holding value under pressure. Why? Because houses are replaceable, but land is not. If you've got a spot everyone wants, your place will sell faster and for a better price than a similar house elsewhere.

Yep, the game is still "location, location, location." BTW, location also takes into account factors like the neighborhood, schools, safety, culture, public services, and infrastructure.

The "progression" principle -- This rule of thumb says better homes bring up the value of a not-so-great house nearby. (And lesser homes subtract from nearby property values.) The lesson: Don't buy the best house on the block. 

An old rule-of-thumb. I guess it's true after all. Thank goodness -- we have a house almost 50% more expensive than ours just across the street and several double ours down a few houses.

Single-family homes rule -- Condominiums lose more value in a down market, and they lose it faster than single-family homes, says Terry Bernhardt, a Portland, Ore., home appraiser.

Yep, been there, done that. My wife and I each had condos when we got married and it took us two years to sell them both.

Some trends endure -- In Bernhardt's market, the craze is Craftsman bungalows. He thinks it's a durable trend. Craftsman homes have charming, slightly nostalgic designs that include covered porches, a mix of indoor and outdoor living areas, higher ceilings and lots of architectural details, including moldings trim, stair rails, and built-in nooks and bookcases.

Not sure if there are any trends around here. I haven't run into any during my searches.

Low carrying costs seal a deal -- Buyers may face a shock when confronted by the real cost of a home, in addition to the taxes and mortgage payments. The carrying cost of a house -- including homeowners insurance, utilities, upgrades, deferred maintenance and, in some markets, landscaping and snow removal -- can make a deal unattractive.

That's one advantage we have if we decide to sell our current home -- our carrying costs are low.

Market peculiarities matter -- As with politics, all real estate is local, so learn your particular market inside out. (Before you buy, get an education as you interview prospective sales agents. Ask each one what's selling and why.) Apply this knowledge by keeping the home's next owner in mind when you buy or build.

Isn't this just another way of saying "consider resale price when you buy"?

Broad appeal -- In a shrinking universe of buyers, homes with the broadest appeal hold their value best. The homes most in demand are three-bedroom, two-car-garage houses with at least two bathrooms. Keep this in mind when you're thinking of remodeling. When comparing the wisdom of adding a new, high-end kitchen, for example, versus a bedroom addition to your two-bedroom home, the addition is probably your best bet for durable value.

We surpass the bedroom/bathroom requirements, so we're good here. BTW, we're looking for more than two bedrooms and at least two bathrooms.

Attractive bathrooms and kitchen -- These rooms, with all their costly plumbing, wiring and cabinets, have the highest value per square foot of any in the house. Investing in their upkeep props up a home's price, says Portland appraiser Bernhardt. Extravagance isn't helpful. Buyers are simply looking for well-appointed, updated rooms with good layouts and appliances.

I think our kitchen and bathrooms are looking a bit dated. I think this one is a negative for us.

Upgrades for energy efficiency -- Improvements to a home's energy efficiency promise a lower cost of upkeep, so buyers pay attention. Good investments include highly efficient windows, beefed-up insulation, new siding and appliances.

Does a new roof count? We got one a couple years ago. I'm not seeing many energy upgrades in the homes we're looking at.

Overall, I'm not sure this piece taught me anything new, but it did confirm many of the house-value issues that I've considered important.

Now all I have to do is find just the right one...

Comments

[Ron@TheWisdomJournal]

One thing the MSN article left out was the importance of cleanliness. Even a dated house can sell easier if it is well kept, clean, smells fresh, and has a new coat of paint (very cheap).

Also, a house needs to be staged for selling. Get rid of clutter, bring in or take away furniture depending on what size the rooms are, make the entrance inviting.

Homes sell in any market, up or down. You have to make yours stand out in the crowd and it doesn't take $50,000 in upgrades to do it.

[Kevin]

I think Ron has a good point, if the house is dirty to the naked eye, I would tend to think that other more expensive areas - like HVAC/plumbing/roof, etc weren't taken care of either.

My biggest fear when we go to sell is keeping it free of dog hair since we have 2 pretty good size dogs. That and keeping them out of the house during open houses and the daily visits from realtors might be our biggest challenges. We've done quite a bit of work to our house otherwise and get a ton of compliments on it, so I'm pretty sure someone will fall in love with it.

[planner]

Another big thing is curb appeal. When people drive by or come to visit the first impression is valuable. Fix up the outside, have good lighting, landscape and dress up the yard, have a nice mailbox. That looks good in pictures when listing your house. It makes a very positive impression when potential buyers come to look. It makes you feel good having neighbors see a nice exterior. It's amazing what a nice appearance and impression do for the value of things.

[Jane W]

We bought a new home in 2006. We looked at it three different times and each time the owners went out of their way to make things nice. The house was built in the '70's (we wanted an established neighborhood in a particular school zone) and the man who lived there owns a landscaping company. Beautiful curb appeal, the inside was always clean, well lit and smelled great. They painted and had the carpets cleaned. It was the most inviting home we looked at.

We looked at one in the same neighborhood that had a dirty cat box in the foyer and looked like they had not cleaned for weeks. The cat box or the house. My real estate agent and I assumed, as Kevin said, that the fundamentals had not been maintained either. So even though it was in the neighborhood we wanted and was less expensive, we didn't even finish the showing.

Impressions matter!

[Lord]

Don't buy the best house on the block.

Don't buy it to flip it, don't buy it for the neighbors or schools, but if you want a great buy, buy it. Those other homes have ALREADY reduced it's value. It's a ALREADY a bargain.

[Diane]

Ron@TheWisdomJournal made some good points up there. I read a book where in preparing to sell her home, the woman actually removed an article of furniture that was PERFECT in the foyer. Her reasoning was that a woman walking through a potential new home is going to be mentally putting her furniture and decorations in it as she does so (this is true)and seeing if it feels like home. She felt like that potential buyer would not be able to envision her own stuff there and feel good about it, once she'd seen that "perfect" piece there. So beside storing extra furniture (to get rid of a "full" cluttered feeling) during this time, see what pieces that "make" the home need to be removed as well.