Shh! Can you hear that?
It's the sound of hollow vault doors being slammed shut and masking tape being drawn to piece together shattered family piggy banks. Smashing the pink porcelain piglet in cases of emergency is the easy part. It's putting the starved omnivorous swine back together that requires the patience of Job.
While America has gone for her hammer, we Realtors have been peddling a seemingly contrary message.
Buy. Now.
While it is difficult to fathom spending money at a time when most are diving under the sofa cushions to retrieve every last nickel and Chuck E Cheese coin alike, we are all familiar with the free market tenet that the best time to buy is when everybody else is selling. Or trying to sell, I should say. The worst of times allow for the best of swindles purchases. The majority of the general public recognizes this, laments the scarcity of available funds to capitalize on the current opportunities, and grudgingly returns to the painstaking task of trying to figure out which of the three credit cards to make a payment on this month.
These prices are crazy! If I had any extra money laying around, I'd buy five!
Of course, it goes without saying that values are so low because of the very truth that so few are in a position to buy. As soon as demand catches back up with supply, and more folks are in better places financially, the opportunity for the best values will be gone. This isn't a sales pitch. This isn't even a sales post. It's just the way it is.
Nope, rather I am simply writing to remind you that the same market forces that apply to the current housing market at large apply to your home specifically, even if you are not looking to buy or sell. I am talking about now being an excellent time to renovate.
Blasphemy, I know.
With prices consistently falling for the past year and a half, why on God's green earth would you invest more money into a depreciating asset? Especially when money is not exactly growing on HELOC trees these days?
Because there are a lot of hemorrhaging material suppliers and minimally employed contractors out there, that's why. If you haven't shopped the box stores or general construction supply retailers lately, you might be surprised at some of the prices that can currently buy you a slab of granite or travertine tile.
With starts for new build homes down to a virtual standstill, there is excess material and labor strewn all across the Valley. Don't believe me? Go post a construction job on Craigslist and don't blame me when your inbox explodes. Just like winter is the best time to resurface a pool, a slow growth market is ripe for a home renovation bargain.
Whether you are an investor that has adopted a buy and hold strategy for a slow motion flip, a homeowner who plans to sell in several years when the market is more conducive to your goals, or just someone who is simply sick of mauve carpet and laminate cabinets, this just might be the time to take the plunge.
It will be more difficult to finance the rehab, with lines of credit evaporating and home equities diminishing, but again, that's the rub. That is precisely why there are bargains to be had.
While counting all of the money you are saving as you pick out those cabinets, thanks to the uncanny insight of a certain friendly Scottsdale Real Estate magnate, please bear one thing in mind as a thank you gift:
The magnate likes cherrywood.
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Fortunes will be made by people who buy today. I agree with you completely.
My message to folks that contact me is a bit different. Buy now if you need a home.
My mail box is overloaded with would be investors who are looking for a steal. Folks trying to sell don't like to be robbed. Further, I don't want our agents out there spending their time trying to help a would be investor "dream the impossible" dream.
Mmmmm. That just might be worth a nice little post.
Back to your post. I've purchased a number of homes. I've renovated a number of homes.
Purchasing is a lot more fun than renovating.
Getting top dollar in today's market means having the home updated and fresh. Most clients don't want to spend more to do this. But times are a changing!
Paul, I know in our area, top builders are now remodeling basements, etc....they have a skill and are using it. Yes the homeowneres are getting basements for 25K finished vs 45 a few years ago. Good reminder.
True Paul the price of many goods is low and contractors are just begging for work in many areas.
Paul, I took a movie seminar hosted by Wells Fargo. David Bach, the author was there along with Brian Buffini. David Bach and the good folks at Wells Fargo were saying that Realtors are in the unique position of buying homes right now because we have access to listings and if all of us bought an investment property, think of all of the homes that would come off the market. Brian Buffini responded with the fact that Realtors are really feeling the pinch now too, and while it's a great idea to buy an investment property, they'd probably rather have food with their meals! Brian Buffini has a line which is so true. We spend money we don't have, to buy things we don't need, to impress people we don't know. Americans were getting home equity loans to buy plasma TV's for their bathrooms. God knows how I miss the money I was making, but it is a sobering wake up call. On another another note, Habitat for Humanity has stores that sell home remodeling type things at a discount and the proceeds go to fund future Habitat projects. Here's the link: http://www.habitat.org/. I checked and there are 14 Habitat Restores in Arizona. Many builders and contractors donate building materials they no longer need to places like this, including appliances, etc.
and certainly with the tighter times, subcontractors will be doing work at great prices just to keep their employees working and are less likely to take off mid-project for another job so if you have the funds, now is a great time to renovate! (since I am a general contractor while wearing my other hat, I really appreciated this post! ;-)
Well I have a HELOC tree in my backyard that the builder threw in, so HA! And thanks for reminding me to check under the sofa cushions for my chuck e cheese coins, my pizza delivery guy has kids maybe he'll take them!
It is true that the buyers that are out in the market today are looking for perfect. They want everything to be completed and hate hearing "well this will be done before closing" This gives the buyer another sense of nervousness. The buyers want everything perfect, and want to move in with only having to put their furniture inside and continue their lives.
Kate, that is true of those who purchase wisely. I think it is a bit irresponsible for we agents to constantly beat the drum of BUY NOW, simply because human imperfection promises to lead some to make poor purchasing decisions in their rush to capitalize. Like any market, their are values to be had, but you can't get caught up in the frenzy and purchase blindly or with money you realy don't have. I do agree with the unprecedented opportunity that is available today, but opportunity doesn't necessarily translate to "slam dunk" in all instances.
Lenn, the bank owned and short sale market is the driving force here in the greater Phoenix area, so buyers are in a position to essentially name their price. The resale market is just very slow moving right now because those owners have a difficult time competing with the bargain rack. I'm not trolling for investors either. I will work with past or referred clients who want to buy investment property, but I'm not interested in spinning my wheels on the get-rich-quick set either. Too many aggravations. I think I might have missed my mark with the thrust of the post as I really only aimed to tell people its a good time in the market, budget willing, to do the remodeling projects they have been putting off. Definitely not advocating that amateurs jump back into the house flipping craze. Judging by some of my responses, I realize I could have been clearer in that message.
Laura, that is true. One of the difficult paradoxes in this market for people to reconcile with their bottom lines is that they still need to spend additional money in most instances to unload a home that is worth less. It is a tough pill to swallow, but for those who are currently trying to sell, the quality of the home must be second to none unless the owner is in a position to price it wih the lower end of the market. There is still a market, albeit reduced, for top quality, and there is always a market for cheap. What I am finding less and less of is the in between. If a buyer is to do any work to a home, the compensation they demand with the bountiful options at their disposal is not trivial. Need some paint and carpet? You will most likely have to reduce your price by about 10 times the cost of doing the work if you are not in a position to do it.
Missy, my general contractor posted a $10/hour position for help on craigslist and received over 100 responses the first day. There are a lot of professionals lookin for work out there.
Bill, absolutely right.
Susan, thank you for the resource. It's an interesting dillema for many. The conditions are perfect for completing a few improvements around the house, but many are tapped out for dough. As for the utilization of Real property as personal ATMs, I'd like to think that we will learn from the hard lessons of the past two and counting years, but I know better. As soon as things improve, we will revert right back to the blithe spending habits that are produced by the unassailable knowledge that the good times will never end.
Janie, where the law of supply and demand taketh, it also giveth. You just need to know where to look. While most everyone is down on the housing market in general, there are always positives hiding under the right rock.
Krista, you can send the Chuck E Cheese coins to my house! The boys will be forever grateful :)
David, very true. The only buyer who doesn't want the home to be in move in condition is the guy who wants a deep, deep discount (constitutes a very large portion of the active market at present).
My husband works construction and everyone is asking for a job. You are absolutely correct....now is the time to remodel!
A few years ago we as consumers were begging the contractors to get the job done and paying through the nose.....now it's the other way around and some are bidding just high enough to cover expenses.
Mandi, thank you for the insider perspective. In addition to commanding a lower than customary price for the work performed, I would also expect that the lack of demand for their services would also land the discerning shopper a more capable contractor as well. Rather than getting stuck with an underskilled sub who is an unknown commodity, a consumer might be fortunate enough that the lack of work will allow him/her to get the guy at the top of the food chain. Kind of like hiring a brain surgeon to fix your headache.
Exactly!
I agree with you, now is a great time for people to remodel. If someone can afford to buy, this would be a good time for them to take advantage of current market conditions, but those same conditions have affected the price of materials and service that it takes to fix up what you already have.
Paul - I just love the way your mind works. Slaybaugh for President in 2012!
JL - Exactamundo.
Tom - There goes the neighborhood!
You have pomegranate magic elixer for sale? What special deal this week?
I'll fax over the 327 page product list, Russell. Your home fax number still the same?
Paul, right again. Occasionally, the strident messages coming from Realtors, albeit friends of mine, can appear insensitive when juxtaposed to the unretouched reality of the current situation and rather similar to the crys of the coyotes outside my wall. I have been remodeling my house, some in part to keep my staff and colleagues working but in a large part because it is now affordable. And ashamedly, because well, I was always so busy working on everyone else home, I really didn't see mine anymore. Each time I see a business go under here in Scottsdale/Phoenix, I get a queasy feeling. Dreadful, how it never fails to miss that solarplexis region...
Ok, I have been waiting to hear, have you gotten that cherrywood gift yet?