Ok, so I'm soliciting opinions on buying real estate in locations other than Los Angeles.
As DeoDuce and I have been exploring St. Charles, MO, we've noticed something strange, there are two kinds of houses available:
1. New construction (5 years or newer), expensive, large houses, small lots, tightly packed subdivisions, far from the city (where I'll work).
2. Older homes (around 20 years), slightly smaller (and less modern floor plans), larger lots (acre-ish), less subdivisiony, much closer to the city).
The Type 1 houses appear to be what everyone here is buying, and they're going for ~$100k more than the Type 2 homes. However, my instinct tells me that in the long run it will be more valuable to own larger plots of land closer to the city. People hate commuting -- as I do -- and like open spaces. The Type 1 houses won't be brand new in a few years; then they'll just be older houses, far from the city, on tiny lots.
So, right now we're thinking that we want to buy a Type 2 house that's close to my work and has a lot of land. Even if it needs renovation (not that 20 years old is that bad for a house) we'll have $100k to play with before we get close to the price of the Type 1 houses. Also, I've read that you pay a premium to buy a new house and that they can depreciate over the first few years, just like a new car.
So, what are your thoughts? Am I foolish to think that land and location will pay off in the long run in a place like Missouri? I find it hard to believe that Type 1 houses will continue to be more valuable than Type 2 houses once they aren't new anymore... and for $100k difference in price we could fix up a Type 2 house pretty nice.
I would go for the Type 2 house due to the commuting issue. By my estimation, it is only going to get more expensive to travel, much more expensive, in the future.
I would also go Type 2. That being said, I would go with the house that you will like more yourselves, not the one that you think will make you the most money.
Type 2 ftw.
Type 2. New construction is neat, and subdivisions are neat too, but all other things being equal, more land and less of a commute is neater. Then again, as with all other references to all other things being equal, you might want to take a closer look to make sure all other things really are equal (crime rates, school quality, etc.).
Well, there are some places, like Creve Coeur or Clayton, where you'll find a Type II house for a Type I price.
Depending on where you're working (although I can hazard a guess), the commute across the bridge along I-70 from St. Charles Co. into St. Louis County (and back) can be bumper to bumper during both rush periods (6:30-8:30am and 4-6pm roughly.)
Maryland Heights might be worth considering as it's just this side of the Missouri river. Even locations way down in South county might only require a 45 minute commute to and from your place of employment.
My preference would be for a Type 2 home, with trees in an area with a decent school district (even if you don't use it, you'll have to pay for it.)
Avoid University City, if at all possible. The closer you get to St. Louis City, the more issues you're likely to encounter.
If you really want room to move around, you can always get a place out near Warrenton or Wentzville along I-70 or out past Eureka down I-44 or in the Festus/Crystal City area down I-55.
I don't recommend living on the IL side of the river as the commute across any of the bridges can be painful on a regular basis, unless you're willing and able to work later (or earlier) hours 10-7, 5-2, etc.
Personally, I've found just trying to move around in St. Charles county to be difficult, even on the major through roads. That is, however, where the major growth in the region is, right now.
Right now, it's a buyers market. There are homes which have been on the market for a couple of months already. Last year, there would often be multiple hits the first day.
Advantages of new or near new houses: often have much better insulation, so reduced air conditioning and heating costs. Yes, you can buy a lot of repairs to an older house for $100,000, but failures often happen at inconvenient times. (Example: our furnace gave out on Christmas Eve in Northern California. It was very cold for a couple of days.)
Have you examined the crime rates of the neighborhoods? I'm guessing that the older neighborhoods may be a little rougher.
One advantage that Type 2 homes have over Type 1 is that they are much less likely to be overseen by a homeowner's association.
I hate them with a passion. I'd take a Type 1 without a HA over a Type 2 with a HA, any day.
It's not the current price that matters so much as the probable return on your investment (ROI).
If you plan to die in the house you're about to buy, then all that matters would be how soon you could see your psychiatrist...er, I mean, how pleased you are with it and how well it's likely to suit your life needs. That's a pure consumption expense, with no ROI issues attached.
If you expect to spend a decade or more in the house you're about to buy, then you want to consider land price trends in the area as more significant than house price trends. For it hath been written that "what goes up can always be pulled down," but land is forever, and will support any kind of house the next purchaser might want.
Finally, if you expect to move within the 7-year national average -- a bit shorter for younger folks -- then house price trends are most important, because the next purchaser is likely to be at least as interested in the house itself as in its location.
Decisions, decisions...
(By the way, when I bought the house I live in today, I expected to relocate to Southern California within five years. That was 1979. To quote the great Yogi of Yogis, prediction is difficult, especially when it's about the future.)
Well, it looks like we're going to make an offer on a Type 2 house that's about the same price and niceness as the Type 1 homes, but with more land and a much nicer view (overlooking a lake).
For you Missouri-philes, I'll be commuting via the 370, not the 70, so it looks like the drive will be about 20 minutes.
Are you going to be in the Hazelwood area? That's where I grew up (high school, etc.).
And I, too, would recommend a type 2 situation. More land is hard to argue with, and plus, my parents bought a house in the city itself for just about $200,000, and now the houses in their neighborhood are selling for around $400,000.
Sorry, didn't finish my thought... Anyway, their house is older, but its value has skyrocketed.
Any expectation of raising kids in the house? If so, I'd go for type 2 for the yard.
Kids. You're planning to have some. Buy what will be good for them. Kids in the neighborhood? Schools? Activites? Lakes are nice. Mosquitoes love lakes.
If you want to make money in real estate, buy some investment property. Buy your home for you. Like art.
I'd say type 2, as you clearly did anyway. Lived in a type 1 style place for a couple of years, and now i don't.