Remember last year when I tongue in cheek wrote that my house appreciated to $339,000 because someone in my area listed their home for that much? One of my neighbors recently refinanced his home to purchase a home down in Puerto Rico and while his was appraised at around $339k, other neighbors have started actually selling their homes and gotten far less. One neighbor two houses down just put their home on the market for $292,000 and another sold and closed at $308,000 (they are right next to each other); by comparison I bought my home two years ago for $295,000.
Does this mean I bought at the peak of the bubble and will see my house’s value languish? Hardly, because the business of homes isn’t as cut and dry as straight numbers. Just as I can’t say my house is identical to the one asking for $339,000, I can’t really compare my home to the one that sold for $308,000 or the one listed for $292,000 – there are just too many differences to be able to say they’re the same.
In both cases, there are only three bedrooms, two full baths and one half bath in those homes; mine has four full bedrooms, three full baths, and a half bath. Mr. $339, he’s just crazy over there because he only has an extra half bath over my neighbors… or is he? $339 has brand new windows, $308 has relatively new windows too but $292 still has the old 20-year old windows I recently replaced for $7k almost a year ago. $292 has a fireplace and a beat up old deck, $308 has neither… so you would think their prices would be closer given some of the other characteristics, but they’re not. With the $308 home, the couple was retiring and looking to move down south, money wasn’t as much of a concern as time was and so they listed it low and sold on Day 1. $339, probably not in a rush, that house has sat empty for months.
Am I simply justifying the price I paid for my house? Maybe in part, but mostly I’m just enjoying the psychology of the housing market as it plays out both locally and nationally in online and print media. I think a lot of buyers are picking their spots a little more carefully now because they know they have time on their side but buying a home is a long term decision. The last housing “boom” was like eight years long so even if down cycle lasts eight years, you’re still only talking ten years of living in one home. Ten years is nothing… that’s only a third of the way through a thirty year mortgage.