Is this a good time to remodel?

[Anonymous]

I think there is one area a lot of the comments miss out on and that is selling and moving may cost a lot in terms of the Prop 13 low Real Estate Taxes you may have. I bought a rather minimal home in a GREAT O.C. area in 1994 during that downturn. My bare lot would be worth more than three times what I have in the place. It is paid for and I could afford to move up but my RE Taxes that are now about $5,000 a year would jump to about $25,000 (1% or purchase price) for what I would like to get. Prop 60 helps people over 55 if they are downsizing but a lot of people don’t think about this consequense of moving up. My option (I have done as much sprucing up as can be done on my place) may be to tear it down and rebuild to save my Prop 13 Tax Base! But all of the comments posted offer sage advise!
Lido

[Anonymous]

I think there is one area a lot of the comments miss out on and that is selling and moving may cost a lot in terms of the Prop 13 low Real Estate Taxes you may have. I bought a rather minimal home in a GREAT O.C. area in 1994 during that downturn. My bare lot would be worth more than three times what I have in the place. It is paid for and I could afford to move up but my RE Taxes that are now about $5,000 a year would jump to about $25,000 (1% or purchase price) for what I would like to get. Prop 60 helps people over 55 if they are downsizing but a lot of people don’t think about this consequense of moving up. My option (I have done as much sprucing up as can be done on my place) may be to tear it down and rebuild to save my Prop 13 Tax Base! But all of the comments posted offer sage advise!
Lido

[temeculaguy]

Lido, valid point, good call. If the great O.C. area is related to your name (Lido island or Newport) then a three wall teardown will preserve your taxes for the most part but they will add some of the construction costs onto your assessed value however it will still be a bargain in taxes. What makes a remodel, addition or three wall work in some areas (like yours) is that it won’t look or feel out of place there, much like Coronado. Some of the coastal areas that were built out thirty years ago are now dominated with remodels and were primarily custom homes anyway. In some of the older prime areas of coastal O.C., it would look out of place if you didn’t remodel. I think tract homes in the suburbs are a different animal, we should ask the O.P. where his place is, a big chunk of Encinitas east of I-5 is 1970’s and 1980’s tract homes, but the West side is not. But you are right, the five fold increase in property taxes in some situations needs to be part of the mix.

[temeculaguy]

Lido, valid point, good call. If the great O.C. area is related to your name (Lido island or Newport) then a three wall teardown will preserve your taxes for the most part but they will add some of the construction costs onto your assessed value however it will still be a bargain in taxes. What makes a remodel, addition or three wall work in some areas (like yours) is that it won’t look or feel out of place there, much like Coronado. Some of the coastal areas that were built out thirty years ago are now dominated with remodels and were primarily custom homes anyway. In some of the older prime areas of coastal O.C., it would look out of place if you didn’t remodel. I think tract homes in the suburbs are a different animal, we should ask the O.P. where his place is, a big chunk of Encinitas east of I-5 is 1970’s and 1980’s tract homes, but the West side is not. But you are right, the five fold increase in property taxes in some situations needs to be part of the mix.

[Bugs]

Rustico,

It is true that my viewpoint does tend to exclude warm and fuzzy, and equally true that warm and fuzzy is a primary factor for a lot of people. There are some people who thrive on home improvement projects. My comments were strictly in terms of cost vs. value, and assuming the use of professionals to perform all the design and labor.

———-
lido,

If a property owner does do an addition their home would be subject to reassessment. A new assessed value may only increase by the “cost” of the addition but it most likely won’t be the same. Still, an original assessment at $200k + a $100k addition is a lot less than a $600k purchase price.

[Bugs]

Rustico,

It is true that my viewpoint does tend to exclude warm and fuzzy, and equally true that warm and fuzzy is a primary factor for a lot of people. There are some people who thrive on home improvement projects. My comments were strictly in terms of cost vs. value, and assuming the use of professionals to perform all the design and labor.

———-
lido,

If a property owner does do an addition their home would be subject to reassessment. A new assessed value may only increase by the “cost” of the addition but it most likely won’t be the same. Still, an original assessment at $200k + a $100k addition is a lot less than a $600k purchase price.

[psteach]

Thanks, guys. You all added factors that I wasn’t considering–I was just worrying about interest rates and contractor availability. I’ve got to get away from the warm and fuzzy and be a little more hard-headed. Its too expensive a proposition to jump into just because of dreams of my visiting in-laws isolated in their own little wing. (Just joking–they’re not that bad, and maybe close quarters does shorten their visits.)

You’ve verified my high opinion of this blog.

[psteach]

Thanks, guys. You all added factors that I wasn’t considering–I was just worrying about interest rates and contractor availability. I’ve got to get away from the warm and fuzzy and be a little more hard-headed. Its too expensive a proposition to jump into just because of dreams of my visiting in-laws isolated in their own little wing. (Just joking–they’re not that bad, and maybe close quarters does shorten their visits.)

You’ve verified my high opinion of this blog.

[sdrealtor]

Just like my Mom always says. After 3 days company and fish start to stink!

[sdrealtor]

Just like my Mom always says. After 3 days company and fish start to stink!

[Chris Scoreboard Johnston]

I think you will find a different attitude already with subs for your remodel, I sure have with all that I have done with the place I bought in March. Most of the people are very slow right now, and very eager to please from a price and scheduling standpoint. As to the timing, it is irrelevant unless you are measuring your outlay in terms of resale value in the near term. Since you stated you weren’t, it should not be a consideration. It has not been for me at all. I focused on setting the place up the way I want to live in it forever, in case I do. That is what should always be the focus in my opinion for something like this.

[Chris Scoreboard Johnston]

I think you will find a different attitude already with subs for your remodel, I sure have with all that I have done with the place I bought in March. Most of the people are very slow right now, and very eager to please from a price and scheduling standpoint. As to the timing, it is irrelevant unless you are measuring your outlay in terms of resale value in the near term. Since you stated you weren’t, it should not be a consideration. It has not been for me at all. I focused on setting the place up the way I want to live in it forever, in case I do. That is what should always be the focus in my opinion for something like this.

[sdrealtor]

Reading Chris’s post of late have brought me back to something that was a strong position I hold personally that I’ve lost touch with a little. Houses are for living and enjoying. They are not and should not be financial instruments. I figured that of anyone here, he would be the one to time the bottom. But he’s much wiser than I would have thought. He found exactly what he wanted, at a price he could afford and I’ll bet he’s enjoying the heck out of his life these days.

There is a great irony on this board to me. Many of you are genuinely pissed off that people viewed homes as financial instruments and drove the prices up through speculation. However, when you look at housing all you want to focus on is the price and buying at the bottom.

I’m not advocating everyone to buy right now but the real decision point should be can I afford it, do I love it, is this the place I can reside for the next 10+ years and yes, is the price reasonable by some metric. There is way too much focus on the last point around here IMO. I have clients looking right now and I can tell you definitively what is out for sale right now are not dream homes. They are the ugly red headed step children for the most part.

[sdrealtor]

Reading Chris’s post of late have brought me back to something that was a strong position I hold personally that I’ve lost touch with a little. Houses are for living and enjoying. They are not and should not be financial instruments. I figured that of anyone here, he would be the one to time the bottom. But he’s much wiser than I would have thought. He found exactly what he wanted, at a price he could afford and I’ll bet he’s enjoying the heck out of his life these days.

There is a great irony on this board to me. Many of you are genuinely pissed off that people viewed homes as financial instruments and drove the prices up through speculation. However, when you look at housing all you want to focus on is the price and buying at the bottom.

I’m not advocating everyone to buy right now but the real decision point should be can I afford it, do I love it, is this the place I can reside for the next 10+ years and yes, is the price reasonable by some metric. There is way too much focus on the last point around here IMO. I have clients looking right now and I can tell you definitively what is out for sale right now are not dream homes. They are the ugly red headed step children for the most part.

[Bugs]

“There is a great irony on this board to me. Many of you are genuinely pissed off that people viewed homes as financial instruments and drove the prices up through speculation. However, when you look at housing all you want to focus on is the price and buying at the bottom. ”

Is that another way of suggesting Rich should change the nature of this forum away from that of being the econo-almanac? Should we not still consider the current pricing structure to be horribly overpriced in relation to all reasonable measures of value?

It seems to me that this forum has thrived precisely because it represents to many of us a haven from the rampant emotionalism that contributed to these excesses. There are plenty of websites that promote the joys of owning home and hearth, but only a few that put that sentiment on the (way) back burner.

There’s nothing wrong with a person who decides they need those benefits more than they need the money, but there is a problem with people who want to have it both ways – they want to make the “wrong” choice from the financial perspective and at the same time be called financially wise for doing it. Pick one, pick the other, we really don’t care; just don’t try and have it both ways because that doesn’t work here.

FTR, I’m holding rather than selling, and from an occupational standpoint I make more money when lots of people are buying RE. It’s in my personal interests for everyone to think that now is a great time to buy real estate. However, I don’t allow my personal priorities to interfere with my rational thinking or my professional work. That’s how you can tell that while I do have problems, having a significant amount of confirmation bias isn’t one of them.

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