I need some help with this one…

This is just my opinion and there’s nothing personal. Observations. No ad hominem. Questions. Here we go…

For quite a while I’ve held this belief: If a property (single-family residential) has a price around One Million Dollars I want to see a mountain or a body of water from the house.

Now, this concept hobbled me when I was a Realtor because in Central Oklahoma there are no mountains here and the bodies of water are generally creeks, stock tanks or reservoirs (“You paid/want How Much? for That?!”).

Oklahoma has many beautiful areas where a great or simple home design complements the site and overlooks the landscape below a tall bluff or hill-top (well, okay no mountain but it is relative) and/or includes a nice blue water lake. (Many of the lakes here are red. From the red dirt – iron oxide.  My preference is blue over red when it comes to water color in a lake. In grade school I was held hostage for eight days by a family who spent their summers at Lake Eufala. In the short time I was there the daily swims turned my finger/toe-nails red, but I digress…blue water) The beautiful lakes and bluffs are in various parts of the state (Arbuckles, Talahina, Eastern half of OK, Bartlesville, etc) and there are many homes and lake homes valued at nearly and above One Million Dollars. That’s fine.

Picture a house on a rock bluff, facing East, lots of glass, with an early morning pastoral scene of polled Herefords grazing on native grasses below. Laying on a blanket looking up at the night sky you can see a comet or count ten satellites as they rotate the earth and see the colors of nebula from a decent reflector telescope set up on the cantilevered deck. I would pay One Million Dollars for that. (Don’t write me about the value of the ranch – the house is next door and the cows and the ranch land belong to my neighbor – this little house sits on 15 acres)

How about Grand Lake? There are quite a few homes there priced $750,000 and up. Lush woodland hill scenery and water. If you live around Tulsa and have the money you probably already have one of these cool lake homes.

Here’s one for $650,000

(I know you cannot drive to the campus from Monkey Island. Price:view. See what $850,00 buys in Norman below)

Back to Oklahoma City and the exception proves the rule. Here’s the exception to the mountain/body of water threshold: tall building, penthouse or upper unit with 40-100 mile view, at least 10 stories up. I would prefer a South-Westerly facing unit for the truly awesome lightning/thunderstorms which roll in, not to mention stars and city lights – several buildings with units $400,000 and up.

So, here’s my problem

would you pay over $800,000 for this view?

How about looking at this little neighborhood store? With the flourescents wrapping the soffits and glaring like the underside of the spaceship from Close Encounters of the Third Kind – every night? Not to mention the constant traffic of college rental tenants stoking the cigarette, beer and pizza jones every single day. Is that worth 800 grand?

The average Okie is not going to appreciate the fact the designer has painted this stucco to look like adobe. We’re not in Corralles or Sante Fe and the wall heights there are 7-8 feet. A nice look, private and you want to keep the coyote out. A “compound” wall might actually help this home. The light coat of oil/sealer on the knotty lap siding has already absorbed/dried out and looks pretty thin. It needs another coat, or two, for that price (I know it’s not done – put it on the punch list).

Every single person I have talked with about this house has brought up the odd compound angled roof in back. Maybe the overhang is for shade, I don’t know. If shade’s good for the corner window why not the other two? If it is for visual effect what look were they going for? If it’s the sheet-metal’s-cut-too-long-at-an-angle-look they nailed it.

Earlier in construction (I didn’t have the camera) there were no obvious “green” (i.e. expensive) framing/construction treatments – no special sheathing and tape system just osb/ply with Tyvek/housewrap. I thought to myself when I saw this “this is almost identical to the multi-family/student housing materials in projects I’ve been building for the past 5 years”. Unremarkable. Common. I had no idea what the asking price would be.

Is there an observable market driven dynamic for converting multi-family (acquisition, demolition and site prep $215,000 minimum)  to single-family spec pseudo-modern new construction? Show me another one.

It goes without saying if someone wants to spend money on something, whether it is the developer or the home purchaser, they have my blessings.

If this home were built on a 20 acre hillside near Lake Thunderbird it would have a different spin. If you’re going to the trouble of new construction put it on a beautiful site. At a comparable site expense of $8-9,000/acre for a 20 acre site and site work for a ten minute drive to OU I would have rolled the dice off Highway 9.

I just don’t understand $850,000  for College and Eufala.

Good luck.

Mars out.

USA Today For Rent…

 

Dennis Cauchon writes for USA Today “home values may take decades to recover.”

I hate to point out the obvious Denny but the prices HAVE recovered. The bubble was the aberration. Compared to prices in 1999-2000 it may take a few years to continue the trend  of increasing value in line with averages but we are recovering FROM the bubble not trying to reclaim the insane overvaluations.

Denny missed a fantastic opportunity to present reality with two of the examples: some people should always rent; and family medical costs frequently intrude and interfere with well made plans.

He closes the article with a quote from an upside-down owner “I wish we’d rented.” An item ignored in the increasingly PC American mentality which says “Everyone is special” and “Everyone should own a home” – the truth is some folks should always rent. They, for whatever reason, will never be property owners in the same way I am not entitled (even though I’m special) to perform brain surgery, perform maintenance on a jet engine or win a Judo tournament.

Sometimes there are organic static levels of categories contained in sets. For instance, contained within unemployment stats there will always be 2.7 to 3 percent of the total made up of folks who for one reason or another will never work. Period. You cannot have 100% employment. The average percentage of homeowners was at levels around 60 percent for decades. During the bubble this ratio increased to 65-68 percent, higher in some regions of the country. Let’s do a little math here. Foreclosures represent approximately 10% (and rising) of housing. Beginning in 2001 to 2006 the ratio of habitual/circumstantial renters who made the leap to home ownership increased about 8% add the speculators caught in the squeeze and voila you can match the 10% foreclosure rate. There you go.

I’m not painting an absolute picture here about the housing foreclosure problem just adding two cents on renters as a response to the 6th grade level article in the 5th grade level USA Today.

 

Mars out.

This is a test…

of sorts. Go to Yahoo, MSN, AOL, or any portal. Read the index page and see how many stories or links you click on. Do you click links every time you read the portal page?

Many times when that portal page opens up I look at all of the images, blurbs, stories, topics and links and do…….nothing (except go directly to my email or some other link in my bookmarks). I’m sure some of you experience this on a regular basis. I was thinking it is a reflection or evidence of some level of rationality.

If you have no idea what I’m talking about then you were probably surfing the “ET” website while eight epidsodes of “The View” play on TIVO in the background.

This is the kind of rabbit trail my mind goes down while painting crown moulding.

Mars out.

SWM (and taxes)…

There are very few government entitlement programs or tax benefits designed specifically for the single white male with no kids and an income above the poverty level. Actually, I’m not aware of a single one. One thing is certain John, Hillary and Barack will turn to dust before they even think of introducing anything of the sort. So, my fellow tax payers, I rely upon you to carry the load for a tax break I can get and as of 11:30 this morning I got it – the mortgage interest deduction.

The parcel also has a rental unit on it so I am a landlord again. Wonderful…

As these things go (buying/owning real estate) you think of this and that to fix, improve, change, make more efficient or green, etc. I’m reading myself to sleep with the tax guide to organize which expenses affect basis, can/must be depreciated or written off in current year as “cash expense” etc. Projects for safety, utility and deferred maintenance are first then a mix of others based on time available.

What if Home Depot had another shelf tag by the carpet which had the depreciation schedule for purchases in increments of $1,000? What if Lowe’s had a shelf tag describing the concepts of cash expense and an improvement as a change in basis as they relate to adding a 150 square foot concrete patio out back? That would be interesting.

I know one thing a ton of money is spent on rental property and is not accounted for properly.

An interesting footnote is throughout the entire process of finding, making the offer, closing, dealing with documents, etc I never talked to the seller on the phone or in person once – every conversation was done via email. And, of course, it was done without a Realtor.

Mars out.

Who’s next?…

(A slightly different view of the same info – debt, credit, declining asset values, default, rental property. M)

• The average savings rate (US) is less than 3%;
• the average household income for two-income family is $60,300 per year;
• so, the average saving account is less than $1,800.
• The average household has more than $9,000 in credit card (unsecured) debt.

Here’s another rabbit trail:

1. home equity tapped with an adjustable rate second mortgage three years ago to pay down credit cards, pay for home improvements, take a vacation at the spa and buy some more stuff;
2. bought new car on seven year note;
3. home value declines to point where primary and second mortgage balances exceed the appraised value of the collateral (the house) making the borrower technically in default;
4. first mortgage holder requires borrower to pay down principal to meet collateral to loan ratio;
5. second mortgage interest rate resets resulting in a couple of hundred a month more in payments;
6. borrower maxed out credit cards again…

The rental market should be doing just fine for the next ten years – single and multi-family properties.

Mars out.