View Full Version : What's the monetary value of really loving where you live?
My husband and I are trying to buy a house in the worst market in the country (Tucson). We've made offers on seven houses so far and every one has fallen through for some reason or another, several because the assessed value turns out to be much less than the agreed-upon price and we didn't want to pay more than the house is really worth (once it was a $25,000 difference). Until we found a house we really LOVE. But it may appraise $10,000 or more lower than what we've offered and I don't know if the owners will negotiate. So that brought to mind the question: What is it worth to live in a place you really love? Would you put off your FI goals and work longer to have a place you really love, or live in a place that's just adequate to your needs but doesn't make your heart pound so you could reach FI sooner? I pose this as a philosophical question rather than a "please advise me personally" question. What are your thoughts?
One thing I've learned over the years is that I've loved almost every place I've lived in. I never set out to love where I lived, but it happened. I really appreciated the small CT town I grew up in; I really loved the college campus I lived on, and I really loved the second college campus I lived on. I loved my first apartment in a Victorian home in a really cute town. I loved my country home out in the boonies. I loved the summer house I lived in. I loved the winter getaway house I lived in. I loved the homes we rented in Vermont over the years.
My point is, there are probably millions of potentially lovable places to live. I don't believe there's that one special home out there that's worth going overboard on budget to get. Sometimes I dream about an expensive budget-blowing place, but really, I'm pretty happy right where I am. And I'd be happy in countless other places, too, I bet.
1tolivesimply
7-8-12, 4:05pm
Jill, unless the seller finds a cash buyer, they will not be able to sell the property for their asking/your offer price. Not many are in a position to come up with 10, 20 or 30K more to pay the difference between the selling price and the appraisal, I say you renegotiate with the seller, if he's not willing to, then too bad, you'll most likely find another property; if you're not in a rush, you can also wait (while you continue looking), because sooner or later the seller will have to lower the price.
Interesting question. And something that is in the near future for DH and me, though not exactly the same since our market is so strong. To answer you, It depends... (like everything). How does the difference compared to your budgeted amount? And to the house price itself. $10,000 on a $80,000 house is much worse than on a $300,000 house. How much wiggle room is there in your budget? How far away is FI? Do you really like the house or the area? I'm more willing to spend more money on an area that I love, rather than the house, as I can change the house part somewhat. I can see how making 7 offers would become very tiresome, but I agree you don't want to go too crazy over the appraisal. Not sure how it works there, but who does the appraisal? Can you have it shown to the sellers? Definitely worth negotiating, but on the other hand, buying a house is a big deal anyhow, so I would consider paying a bit more if everything else seemed good and I had extra money around.
Are all seven offers accepted by the sellers but falling thru for other reasons like inspections and/or appraisals? Are they not even accepted by the sellers?
Tucson and many other areas are complex due to the vast number of mortgage issues, for example foreclosures. It is hard to do appraisals in a constantly changing market.
I've learned (the hard way) to always, always go with my visceral reaction to real estate. I'd be inclined to lay it on the line with the sellers, and maybe split the difference if you absolutely feel in your heart it's the house for you.
ETA: Loving where I live is very high on my priority list. Although I love my neighborhood, my house doesn't work for me to the extent that it's a big, stinky, dead albatross around my neck. If I could replace it with a slightly larger replica of my old digs, I'd be in heaven. For some of us, houses really do matter.
Funny you should ask. DH and I sometimes drive to other neighborhoods looking for less expensive houses. Our property taxes are very high where we are so we need to find something more affordable in the long run. However, after many searches, we always come home and realize that maybe this house is worth the expense for now. It certainly isn't the house though - it is the neighborhood and community which make it special.
I'm not very picky about houses because I like most old houses and could make most all of them work for me.
But location? That's important. Ever since I was a kid I wanted to live in a real city and now that I'm here, it's unlikely I'd move.
So yeah, I have to love the place I'm in in some way and I'll gladly pay higher city taxes and higher housing costs to live in a "real city."
awakenedsoul
7-8-12, 7:26pm
I don't think you can put a price on loving where you live. It's a real keystone to happiness. Kind of like having an excellent marriage, or a caree that ignites you. I LOVE my little cottage and garden/farm, but as I've written in other posts, I have a very difficult time with my next door neighbors. But, as far as the big picture, this is a very financially advantageous place for me to live. Proposition 13 keeps my property taxes low, (after living here for 15 years I pay $1,400. a year.) I don't have a mortgage. I can bike everywhere, my utilities are super cheap, and I'm biking distance to the MetroLink train if I want to go downtown. The bus stop is a block away.
I'm really glad in this economy that I didn't shop for a home out of my league. By living very frugally, I was able to stop working at 47. I may go back to it when the economy improves, but I am really happy growing my own food, living very simply, and learning new skills like knitting, soap making, sewing, etc...
Many of my students got in over their heads with real estate. They bought two homes, are underwater on their mortgages, and their lives have become very stressful. One woman lost her retirement money in the stockmarket, lost more in her divorce, and now, at 60, she works full time as a paralegal and has a roommate. Another bought two homes, lost her job in aerospace, got her real estate license but couldn't make any money at it, and now is working in HR and commuting everyday. She's 60, too.
If the housing market stays like this until 2020, (which is what Suze Orman predicts,) I think having something that's easily affordable is very wise. So many couples are in situations where only one of them is working now. I cut my expenses in half and that really helped, too.
You're buying at a great time! That's a lot of it, market timing. The people who bought homes at the height of the market are really hurting.
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Tucson and many other areas are complex due to the vast number of mortgage issues, for example foreclosures. It is hard to do appraisals in a constantly changing market.
That point about appraisals is important, so true.
OP, have you actually SOLD you current house?
For me, it's as pinkytoe said: the neighborhood and community supersede the house.
When my first wife and I separated, I moved to an efficiency apartment in a really nice upper-class neighborhood, from which I could walk to pretty much anything I wanted to (except work, and then I could get there all the way on the bus). The apartment was very small and old (kind of problem for a guy who moved in with a lot of things that needed to be plugged in) and it seemed impossible to take anything out of where it was without moving one or two other things. But I loved the neighborhood and, if I could have afforded even a small house there, I would have been very happy to stay.
My current house is similar -- I could have been happy with several in this neighborhood. But it's the neighborhood that really attracted me (as long as the house met some criteria like price, being of relatively recent construction, and having a two-car garage). It's not my old neighborhood, but the location is great and houses were affordable and I'm happy enough.
There would have to be some huge overriding advantage to a house before I would go past my budget for it. But that's me.
ToomuchStuff
7-9-12, 3:18am
A friend of mine bought a house from someone infamous and basically gutted the inside and redid it. Paid it off in 10 years and is quite happy with it. He might have been better off, tearing the house down and rebuilding. His view, the house is where he sleeps, the location and amenities make it worth it for him.
I also know of a few people who have gone up to a house that wasn't for sale, and bought it for cash. You have to be comfortable with your wants, needs and the price you pay. (too personal)
Me personally, I doubt I EVER would. A house is just a box, and when I was a kid, they mentioned how there was so many baby boomers, that when they retired, their wasn't going to be enough people working to pay for them. I asked if that was the case, then with fewer children, won't the cost of houses fall. I was told that wouldn't happen, yet with the housing bubble now, I have seen houses mortgaged for one thing, and the price that they say they would go for, being something FAR different.
I agree with the posters who said they've loved every place they've lived (this has happened for me but it takes, in my experience, about 3-5 years to really love your house and neighborhood) and that location is more important than house.
When we moved to this state (MN, from Tucson, actually - we used to live a mile north of UMC), we found a house that I really loved in a nice part of the city. BUT it needed a lot of interior work that would involve the lead paint that we knew was there - and we had an 18-month old that had her hands and everything else in her mouth all day long. So we decided that the level of stress this would involve was not worth it for us. We found a post-1980 house (no asbestos or lead paint) in a suburb that we liked better than the other suburbs (quieter, more green space than other suburbs or the city), and it has worked out very well for us, particularly with regard to schools, friends, and gardening.
Unless I were absolutely certain that I would never be moving again, I would not pay more than market value for a house. But then I come from a family that moved often, so that's always on my radar. And one thing that moving often has taught me, is that what makes a house a home is what you do after you move in - not what you see when it is on the market.
Thanks for all the input. I wish I could say I've loved every place I've lived! Part of the problem is of course me but part is also lack of resources to get into a good neighborhood. Meth-ville stick-and-yucco is not really very lovable. Sold our last house because the neighborhood was so bad we couldn't go for walks or take our son out in the yard to play. Not being dramatic - it was really that bad. (As an example, a month before we moved out, we came home from a bad doctors appointment where we found out our son might possibly need brain surgery (turns out he doesn't, thank God) to two hours of firefighters, police and arson detectives in our house because our neighbor had tried to make a Molotov cocktail and threw it in our yard. Four days later the neighbor on the other side was hauled away in handcuffs for beating his wife and threatening the 911 operator that he would shoot up the house, and he had to be hog-tied because he tried to kick out the window of the cop car.)
Most of the houses here are foreclosures that are either totally wrecked inside or have been bought by investors and redone, pricing them out of range. Despite what they say about it being a buyer's market, if there's a decent house in a decent neighborhood, you have to make an offer the first day on the market at or higher than the asking price or somebody else gets it. We gave up on the overpriced house and are now looking for a wrecked house in a decent neighborhood where we can do the minimum to at least make it livable then save up for the things that will make it what we want it to be. Thank you all for some needed perspective!
Oh, by the way, I don't mean to abandon this (or any) thread, but the only time I usually get on-line is at five in the morning before my son wakes up.
We gave up on the overpriced house and are now looking for a wrecked house in a decent neighborhood where we can do the minimum to at least make it livable then save up for the things that will make it what we want it to be.
Anyone who ever made any money investing in real estate knows that buying the worst house in the best neighborhood is about as close to guaranteeing success as you're likely to get. What that means is you're going to have a lot of competition bidding on that type of property. Stick in there, keep pitching and it will happen. My DW and her new husband got their new house, a short sale, on the 17th try. The key is to not get discouraged and not give up. Regarding seller negotiations, as a buyer you can offer anything you like. If you're bidding on bank owned properties it might pay to find out what bank holds title and what their policies are. Some are more aggressive than others about clearing out the portfolio.
It's harder to put an actual monetary value on quality of life sometimes. What would you be willing to pay to be able to let your son run out into the yard and just be a kid the way its meant to be? The answer may give you a starting point. Better neighborhoods are desirable for a reason. Less threat to your health or even your life, more opportunity in almost every respect, a statistically better shot at a positive future for your son, etc. Every box you check off adds value so I'm guessing the total value ends up being pretty high.
Oh boy, 17 tries?? Not sure I have another ten in me. :|( Point well taken though, I guess the key is perseverance. I was afraid of that! What I keep getting hung up on is that no matter how great a place you find, somebody can move in next door and make your life miserable. Especially now that the neighborhoods are changing so much with all the foreclosures and turnover in formerly stable areas. Oh well. Maybe I'll just take our down payment money to the casino.
Oh boy, 17 tries??
People who don't do this for a living sometimes forget that you can have multiple offers working at the same time. If you're an investor you just have to be prepared to take on multiple projects at once if it works out that way. Homeowners just need to add contingencies to the purchase agreement that would allow them to bow out without losing their earnest money if a more preferable offer is accepted at the same time. You can usually use inspection clauses to accomplish that, but there aren't any rules stopping you from just saying "I will buy this house unless my offer on that house is accepted". We did that with the kids.
My husband and I are trying to buy a house in the worst market in the country (Tucson). We've made offers on seven houses so far and every one has fallen through for some reason or another, several because the assessed value turns out to be much less than the agreed-upon price and we didn't want to pay more than the house is really worth (once it was a $25,000 difference). Until we found a house we really LOVE. But it may appraise $10,000 or more lower than what we've offered and I don't know if the owners will negotiate. So that brought to mind the question: What is it worth to live in a place you really love? Would you put off your FI goals and work longer to have a place you really love, or live in a place that's just adequate to your needs but doesn't make your heart pound so you could reach FI sooner? I pose this as a philosophical question rather than a "please advise me personally" question. What are your thoughts?
I haven't read the other posts yet but this is my view for myself: I would rather be FI and live in a less-than-ideal home or area.
That doesn't mean it can't be a very nice home in a very nice area - just not some "dream" place. One thing I have discovered once I became FI and was able to quit my job. And that is that I am free each and everyday to go where ever I want, and stay there as long as I want, without having to actually live in (and pay the price) in some dream area. For instance, I love beach and seaside towns but they are extremely expensive to buy in or even rent. So I can live inland further for much less the cost of a beach community but, because I am able to buy or rent a much less expensive place and thus able to retire sooner, I can actually spend more time - all day, everyday if I want - at the beach and in that town doing the things I love then I would if I actually lived there but was spending the bulk of my days working so that I could afford to live there! I've tried to explain this to my friends who often say that if I continued to work another 25 years I could afford to live in a great beach community. Lets see... work another 25 years so that I can pay for an expensive beach house so that , in 25 years I could retire at the beach and be free (in 25 years) to spend my days at the beach, or live a bit inland and retire now so that I can spend everyday at the beach now? And anywhere else my fancy takes me? Hmmm..... decisions, decisions :-)! As it is I have choosen to share a rental by the beach AND am retired so have the best of both worlds. Think I'll drive up to the mountains tomorrow - I gues I could work another 25 years to be able to afford to buy a little cabin there - that i could use regularly...25 years from now. Or i could just use that money to fund an early retirment and more frugal digs and go there now...maybe tomorrow :-)!
awakenedsoul
7-10-12, 3:52pm
That's how I feel, too Spartana. When I stopped using my car so much it was the same kind of revelation. The average person in California spends $10,000 a year on their car! I am super close to everything. It's very flat here, and we have tons of bike trails. I can also get a Meto Link train pass if I want to travel on the weekend, and it's only $10.00! My house is 30 miles from Burbank. $89,500. is very low for that proximity to LA.
My brothers spent $700,000-$800,000. on their homes. They are working so many hours and they are so stressed. They don't have any personal time. This was the mentality in CA at the height of the market. That's such a ball and chain to me.
That's how I feel, too Spartana. When I stopped using my car so much it was the same kind of revelation. The average person in California spends $10,000 a year on their car! I am super close to everything. It's very flat here, and we have tons of bike trails. I can also get a Meto Link train pass if I want to travel on the weekend, and it's only $10.00! My house is 30 miles from Burbank. $89,500. is very low for that proximity to LA.
My brothers spent $700,000-$800,000. on their homes. They are working so many hours and they are so stressed. They don't have any personal time. This was the mentality in CA at the height of the market. That's such a ball and chain to me.
Wow - What a great deal you have! For a brief time I had a place near Temecula. It's self a very nice area of horse ranches, wineries (I hear Iris Lily bookeing her airline reservations now), avocado groves, nice old main st., etc... It was half way between LA and San Diego. Half way between the mountains, the beaches and the deserts. And probably less than half the cost to buy there then elsewhere in SoCal closer to the cities or beaches. Lots of jobs too if one wasn't retired. Within an hour or less you could be in so many wonderful places, spend all your day there, yet never have to pay the preium and extra working years to buy a place there. So while my dream might be a cozy little cottage on the beach, it my reality is that I'd rather be work-free and live an hour inland instead of being tied to a giant mortgage. Too bad your brothers can't see that.
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