EX, DX, LX :: Should I Stay or Should I Go

It's been pretty standard for the last couple decades. If you wanted a house you'd buy a starter home that you could afford. When you outgrew the space and your means increased you'd sell the house and move to a better neighborhood. This presumes you'd be able to sell or rent your existing residence. Considering the pace of population growth in the US this was not really a problem.

In recent times, however, there has been a transition. Starter homes designed for young couples are now becoming affordable housing for extended families. The ability to sell the home has become more about price point and less about configuration in this niche of the overall housing market.

During the present market downturn there is a phenomenon exacerbating the slide. People looking to downsize for retirement, or move to a more walkable neighborhood cannot sell their present home. Further, they are in a unit type that doesn't allow them to rent their home at a price point commensurate with the property value. They risk devaluing their property by collecting a low rent yet cannot sell their home.

The above is not a problem if the owner realized that their personal residence is not an investment but actually an expense. Aside form proper maintenance and upgrading finishes there is no other way to add value to the residence. They are therefore locked in to a property that they may have loved, but the world may no longer have a use for.

That will be a bitter pill for many to swallow, but the evidence is all around us. Poorly constructed homes on the fringe of suburbia will depreciate at an accelerated rate once they start requiring major maintenance. Proximity to schools will not convince the lenders to approve a loan on building in decay in a neighborhood of buildings in decay. Case in point are the homes affected by defective wallboard where homeowners risk foreclosure if they cannot pay the difference in lost value to the homes or have the contractor (usually out of business) to remove and replace the drywall.

Those looking to buy a home should therefore be very cautious about the materials of which they are built. Further, the plan of the house should facilitate various types of growth. I reference the starter homes above acknowledging that today's starter may be tomorrow's affordable housing. As such it should be able to allow for growth in a straightforward manner. Thus the owner of the house can expand the market when they are ready to move on, or they can reserve the right to grow in place. This is a key determinant of sustainability and will allow the house and the neighborhood to adapt market changes over time.

Posted via email from Kenneth Hitchens: Architect