I’ve lived in my quiet suburban neighborhood for about 21 years - we built the house and raised our kids here. We love our house - put a ton of thought and money into it and it’s still lovely, and I’m not ready for a downsized house. However, it needs some updating - a new kitchen, bathrooms and a general sprucing up that given the size of the house and my taste, will not be cheap.
On an entirely other note, I use a background service to screen health care workers that we employ for my in-laws who are elderly and disabled and need 24/7 care. I’ve done this for several years. The service also has a property search tool, so tonight, bored, I happened to search my address and could see the particulars of my house, including deeds and loans, etc. From there, I checked several neighbors and saw that almost everyone is near or really underwater on their mortgage!
On the other hand, I don’t have a mortgage on my house and am thinking of pumping a lot more into the house. Wondering how wise I am to invest in a neighborhood where no one really owns their house? Does it matter?
Does it matter to you? I mean, how long are you going to live there? Are you doing the updates to make you happy while you live there or are you doing the updates looking to sell soon? Do to the house what you want to do for the amount of time you will live in it.
It would make me hesitate. I want to say “do it for you, not resale”, but make sure you don’t spend money that you couldn’t afford to lose in a worst case scenario.
OTOH, did your neighbors buy more recently and overpay compared to today’s market but not compared to what you paid?
It’s a real estate agent question. Your neighbors may not default and if they do, their home values may be high enough not to affect your future sale negatively.
In theory, you don’t want improvements so pricey you’d never recoup them when you sell. But if you’ve already got a lot of appreciation, your choice.
We will never recoup the money we have put into our house, but I have a house I love and I am enjoying all that we have done. We probably have 20 more years here and then to assisted living. No condo. I am currently doing some cosmetic updating, probably for the last time. Our neighborhood is stable, don’t think anyone is upside down on their mortgage, but can’t say for sure.
I have not looked into our neighbors’ situation, but one thing I know for sure… whoever buys our current house from us will bulldoze it down. It is an old house on a larger lot, and dirt is at a premium here. Definitely a teardown. Still, we replaced the siding, made the kitchen functional, and recently replaced the boiler. Mr. is hellbent on retiring here, and the improvements we made are not intended to prep the house for resale. They are meant to make the house less troublesome for us for the nearest 15 years or so. But life is unpredictable - who knows if we decide to sell sooner. I am not going to cry over the $$ we put into the renovation. So my advice… go for it if it is not going to break you financially, but accept the fact that you might have to write those $$ off.
You never know what’s going to happen in your neighborhood. In 2007, a nice guy started building a BIG house across the street from us. Then his wife left him and his life fell apart. He abandoned the project. For SEVEN YEARS, we had to drive by this monstrosity with the Tyvek flapping in the breeze. Thank goodness we didn’t need to sell our house during that time. Finally, in 2014 a developer bought it. He asked DH and me to verify that it was structurally sound, but we told him we couldn’t help him since we had a vested interest, ha. He finished the house and sold it to a doctor.
One piece of advice: Don’t ever buy property on a private road!!! I could write a novel about that. Right now, we literally do not know who owns the road. The original developer didn’t set up the project correctly in 1990 or so. Typically in our area, each homeowner owns out to the midline of the road. But that’s not the case here, according to our lawyer. Blech.
The way to look at it is what is your house resale value with additional improvement. Resale value is the most important factor. The reason your neighbor’s home are underwater is because value of their home is less than their mortgage. You also do not want to spend so much in your house that you have the most expensive house in your neighborhood, unless you do not care about resale value because people would only pay up so much for a very nice kitchen.
If average price of home around your neighborhood is $1mill and you spent $500K on home improvement, you are not going to be able sell your house for $1.5 mill because someone with $1.5 mill budget they may want to look at a different neighborhood (not for all the upgrades you have put in).
Real estate is an investment even if you plan on living in it forever. For most Americans, real estate is the biggest investment and wealth.
I don’t generally own the most expensive real estate in my neighborhood for resale purpose.
I think it really depends on how long you think you will be staying. If you are going to stay 5 years, then put in less. If 10 years, then do more of an overhaul and enjoy it.
Can you find a middle ground? Can you update without installing a new kitchen, bathrooms, etc? Painting existing cabinets or adding new doors or pulls, replacing countertops, purchasing new appliances, etc are all far cheaper than ripping out and putting in all new.
Paint, new flooring, updated lighting and pulls can go a long way visually and be cost effective.
Am I the only one who finds peeking at neighbors’ mortgages a little… uncomfortable (even if it is public record)?
That said, IMO, if you want to enjoy your house and it needs updating, do it for you, not for the future resale value. Enjoy the updates, rather than feeling the need to do it down the road so the house is more marketable without outdated kitchen/baths.
I’m surprised the mortgages are public record. I know our nextdoor neighbors were probably underwater for years since they bought at the height of the market and our houses lost a good third of their value for a while there. We put in a lot of money into our house and it is probably the nicest one on the block - though not in the neighborhood as a whole. It’s not a great house for aging in place however.
However, it does not tell what the current loan balance is. If the loan has been in existence for some time, the current loan balance may be substantially lower than the original loan amount.
We have about 3/18 houses for sale in the neighborhood and all mid divorce. During the real estate bubble, several of the homes sold for way more than they were worth and those are the ones with high mortgages - those high prices have not fully rebounded. My house is already the most expensive in the neighborhood by almost 50% - I was one of the first to build in here and I built the house that I wanted. To put more into in makes no sense financially, and I would only do it for myself and my own comfort. What concerns me is that those who can barely afford their mortgage will not maintain their property very well - I’ve noticed over the last few years some people are letting their lawn maintenance go just a bit - not putting down mulch regularly and letting weeds come up in the beds. The lots are about 1.5 acre each, so the yards are the first thing you notice. On the other hand, my property is like a park and I spend a fortune on it, and H and I put in a lot of our own labor.
There are extreme cases where neighbor financial status may affect your quality of life in the neighborhood. During the crash of 2008-2009, some neighborhoods were almost emptied of homeowners due to foreclosures, leaving most houses lender-owned, and neglected due to lenders being unable to keep up with the flood of houses they now owned through foreclosure, and the lenders themselves going bankrupt. Neglected swimming pools full of mosquitoes were one problem.
If your house is already 50% more in value than the rest of the homes in the neighborhood then it sure would seem that sinking a lot more $ (what you are describing doing I’m assuming would not be renovation on a shoestring) is going to out price your home even more - I can’t believe you’ll recoup that if you home is in that much more of a higher value than your neighbors.
Also, appreciate that you and your H have the time and $ to maintain your home to it’s pristine condition. Not everyone has that luxury or time or $$ to keep those standards. The desire might be there, but not the resources.
@mathmom , whether mortgages are public record depends on the state, I believe. When we lived in TX, we were shocked to see the amount people borrowed printed in the newspaper. In MA, only the sale price is readily available.