McMansions Causing Some Indigestion

Another pretty good article at http://www.realestatejournal.com/buysell/markettrends/20060619-fletcher.html?rejpartner=mktw

Kind of long and not exactly to the point so here is the short answer---LOCATION, LOCATION, LOCATION. 

Their is one common denominator in the article--the houses going down in value are newer, on small lots, and surrounded by houses that look pretty much alike.  I said newer, not new.  Most are in the five to ten year old range and probably need some updating.  The question for buyers becomes Why buy a ten year old, slightly dated house when I can get a brand new one for just a little more?

Good question. 

So what is somebody, like you perhaps,  to do when looking at that first purchase of a home.  Well, you can buy a brand new house in a development that is really expensive and will look dated in a few years.  Or you can buy one of those dated homes and get a slightly less expensive deal in a neighborhood that may be showing its age.  You cannot buy one of those really expensive homes in a really expensive development because you can't afford it.  But here is what you should do.

Go to a really neat, old established neighborhood and find a loser.  Don't risk your money and your mortgage on a new development or a new old development, if you know what I mean.  Find the established neighborhood in your town with the really good school system that has been there since your parents were teenagers. 

Then go find your victim.  Shouldn't be hard.  Go to a realtor and ask to see the house that has been on the market the longest.  The seller either has a really bad house, is getting divorced, is dead, or is overpriced.  Figure out if you want to live there, figure out how much it will take to make it livable, figure out what you can afford and then make a low ball offer. 

It works and you will make a lot of money when you sell it.  Or you will live it in for 20 plus years and still make a lot of money.  In The Millionaire Next Door  the authors note that 97% of millionares are homeowners and half, yes half, have lived in the same house for more than 20 years. 

The moral is buy right the first time.  For a case study see Category 9-Buying A House For 30% Off.