My husband posed a question to me today: are we planning to spend too much on our renovation based on what we'll get from it?
To recap - we're putting our house on the market next month, and if it sells we plan to use some of our profits to rehab one of our rental homes for us to live in. That will leave us eight rentals to pay all our bills, plus money in the bank. Even if neither of us makes a dime on our other endeavors we'll stay afloat.
The problem is the house we plan to move to is old and need some major upgrading, including electrical work, a new roof, an addition and a second bathroom. My husband's question is a fair one - will our resale value reflect our investment? Hard to tell.
And what's our alternative? That's the question that got me in trouble this morning. First I perused the local real estate ads: nothing. There are no "deals" in town. Housing prices shot up last year and no one is willing to lower them yet.
Next I pulled up the Santa Cruz, California, listings, and found a whole different story there. Santa Cruz is paradise - a coastal town with lots of charm and character. Prices hit the roof a couple of years back and then started to slide. Two years ago you wouldn't have found a single stand-alone home in Santa Cruz in the $300,000 to $400,000 category. Now there are several I'd consider living in. Still, we can't afford that. Not without some major lifestyle changes.
That's when I lost it. I emailed a bunch of listings to my husband titled: "All the deals are in California" and marched downstairs to his office to hammer in my point. If homes in California are getting to be the same price as homes here, why can't we move back? See, even a die-hard fan of sustainable living turns into a sucker when paradise comes calling.
It took about an hour to regain my sanity. An hour of choking back tears and chanting inwardly "sustainable living, sustainable living." I adore Santa Cruz - the people, the climate, and the funky sensibility there, but there are many reasons why not to move back to California.
1. The prices aren't the same. Not really. Those houses are $300,000 - $400,000 US, not Canadian. Big swing there. They are also far out of town, up in the hills, which would mean we'd spend hours in the car and lots of money on gas.
2. A California house means keeping up with the Jones', California-style. I'd like to believe this isn't true....but it's true. It takes a lot of money to "slum it" in Santa Cruz.
3. We'd have to go back to full time jobs. Both of us. With all the expense that entails and the detriment to our quality of life. We'd probably need a second car, too...
4. Which means we'd be right back where we started when we decided to sell our house and move away from Santa Cruz four years ago!
What's the moral of the story? There will be opportunities presented by this recession. Housing prices will fall and if you've saved up some money you may be in a position to find a great deal. Go over your numbers and think about it, especially towards fall and winter of this year.
Just keep your head. Don't buy a house just because it's "such a bargain for its location". That's not sensible under any circumstances.