First Centennial Title’s Market Condition Report for November has been sent to us. Click on the chart below to enlarge. The section of the report titled “The Big Picture” provides a nice synopsis of the data presented, so there’s really no need for me to recap.
CHRIS
Can anyone advise me of a few things since I am very new in the ways of buying a house.
I have looked at Iron stone and there are 2 associtation fees, one with Wingfield Foothills and one with the actual Iton Stone complex, does anyone think this will effect resale down the road, or is this becoming so common it will not matter? (total about 100.00 monthly)
In this market should I consider price per square foot? I am told that it depends on upgrades, but can someone advise me if a person should still be paying over 100.00 sq ft in this area? I do plan on living in the house greater than 5-10 years if that matters.
I would appreciate any advise anyone out there could give me.
thanks!
Sully
Chris, a lot depends on what you can afford. In my opinion I don’t think you should be paying over 100/ft, there are many other buys in that area for less.
As far as the 100/month HOA fee, again depends on what you can afford and how much you’re getting out of that fee. Also, these fees have a nasty habit of increasing every year or so.
Patience is a virtue. Find a few places you like, and watch them for a while. See if they go quick, or if price is reduced. With the current inventory in the area, I doubt you will miss the buy of your lifetime – as next week another one will come along.
The banks (for REO’s) will start having fire sales sometime in the near future, they have too much inventory on their books.
CHRIS
Sully,
thanks for the feed back. I have been watching this blog for the past 8 months and I admire the knowledge and feedback that I have read so this was the first place I thought of to ask my questions.I have been searching, first I think I know a good price and then boom it changes, I cannot seem to keep up. I would like to have the American dream without some of the greed that I have witnessed. Just a home, for me and my daughter. Sounds Naive when I write it down, but that is why I came to this blog. It does help…all of the input from so many.
Thanks Again!
chris
BanteringBear
Chris-
You’re taking a cautious approach, and that’s the right thing to do. You probably already know this, but NEVER listen to anyone who tries to hurry you into a decision regarding buying. There will always be another place, so DO NOT get emotionally attached to any prospective house. View the purchase as a business transaction.
As far as HOA fees: personally, I would NEVER buy a home that had them. It’s one thing to be at the governments mercy on property taxes, but to have HOA Nazi’s emptying your wallet while telling you how you can use your property is quite another. Stay away is all I can say.
Price per square foot is a great barometer when gauging value, and should definitely take into account the finish materials used.
Keep in mind that PPSF will likely be higher in nicer areas, as the land is more valuable. Always has been, always will be. Also take into consideration the lot size. A home on a half acre should garner a higher PPSF than its equal on a quarter acre. It’s hard to make a blanket statement about how much per square foot you should pay because of these variables. If you have more questions, keep asking. Post mls #’s of houses you’re considering, so we can take a look.
Lastly, LOWBALL the hell out of everyone. All they can say is no. You’re in the driver seat, buddy.
smarten
Chris, BB makes a lot of good points!
Whenever there’s an HOA involved, you quickly learn that what you thought was YOUR property turns out to be your snoopy neighbors’. It can be a shocking revelation. So given a choice, STAY CLEAR.
Many HOA [or their managing agents] have now gone into the business of charging new owners to become members of their associations even though according to HOA docs, new owners don’t have a choice. So they’ve come up with all sorts of creative adminstrative transfer fees to extort from new owners. The worst I’ve seen is in Somersett where the fee is a percentage of a property’s sales price and, it can easily total several thousands of dollars. My recommendation is that if you’re going to purchase a place with a HOA, you make the seller pay all HOA transfer fees so you’re not stuck.
Two HOA [or really, one within a larger umbrella], are not uncommon. What generally happens is a very large parcel [like Somersett] becomes a master planned development. Then within the development, there are a series of smaller subdivisions because the master developer has secured “partners.” The master HOA handles the more basic amenities like streets, guard stations, rec centers, landscaping, etc. The smaller HOA handles the particular amenities of your subdivision which might extend to exterior walls, roofs, common areas, common area landscaping, etc.
I think in a market like this [where there are a very small number of sales making the median sales price almost meaningless], price/square foot can be a useful [but not the only] tool to compare values. Remember that the cost to build upon a piece of dirt is oftentimes expressed in a price/square foot. Although I’m not a builder, I would be surprised if a newer mid grade home [without the land or permit fees] can be constructed for much under $100-$125/square foot. So if you’re smart [which you obviously are by having found the RRB], you’ll probably be able to buy for less than the cost to build – always a good thing.
Having said all of this, we’re on the cusp of the lowest long term mortgage rates in most of our lifetimes. That translates into a lower monthly cost to own. Also if you’re a first time homebuyer, you’ll probably qualify for a $7K tax credit from the federal government which if you don’t owe that much income tax, will turn into a refund [actually a loan which must be repaid interest free in installments over several years]. This $7K can be used for anything but notably, to repay yourself for part of your down payment.
So for you, this may be a great time to find something, as BB suggests, on YOUR [as opposed to someone else’s] terms. Good luck and keep us posted on your successes.
Marla
I’d have to say that paying dues to a HOA is a mixed bag. Much depends on which HOA your’e talking about. One problem in buying into a new neighborhood with a new HOA is that you don’t know what your’e getting into.
But to describe every HOA, everywhere, as evil isn’t really fair either. The most beautiful neighborhood in Reno is Caughlin Ranch; clearly it has the most well maintained common areas, walking paths, etc. Thanks to the HOA there. Perhaps that is why the price declines in Caughlin are among the lowest in all of Reno. I’m sorry, but to suggest that a bunch of neighbors would band together and accomplish the same is just silly. I happen to enjoy driving through a neighborhood where nobody has a torn down 1978 Corvair in the oil stained driveway. Just my perspective.
Sully
Great an HOA debate! Personally, I agree with BB whereas my wife agrees with Marla. Maybe its a male – female thing! 🙂
Move to Reno
If I were to move into a subdivision, I would want a HOA because it improves property values and looks. Most people who belong to a HOA don’t attend their meetings. It’s probably a personality thing, some folks just can’t stand restrictions on their God given right to re-build a ’49 Mercury in their driveway.
That said, I live in a neighborhood where the home parcels are between 4 to 7 acres and their are no real restrictions. Bonfires in the front yard…….no problem. Shooting rifles from my front deck…….alots of fun.
Future Buyer
I’ve always lived and rented where there is an HOA and I think it’s a great way to control the neighbors. I don’t want to see the 49′ Mercury rebuild. I think you get the cost back in protection of home values due to lack of bad neighbors who neglect their homes with peeling paint etc. Of course there is no protection of home values in the current economy, but in general. I am currently in a rental, and just waiting for some of the neighbors to complain about the fact that the landlord is going to need to cough up some $$$ to repaint this place soon! I wouldn’t buy anywhere without a HOA. Can you guess my gender?
Tom
Future Buyer, I have had some bad experiences with HOAs. Some do promote good standards, as you say, but it really depends upon the luck of the draw and who is running the HOA. To protect yourself, you pretty much need to become involved in the Association–and who wants to become a local politico. Seeking permission to plant a pine tree on your own lot, and then having to debate your neighbors at a meeting over their side yard “implied” view rights, is something to be avoided. CC&Rs are one thing, but a clique of retired old geezers on a landscape control committee can be awful to contend with; they have too much time on their hands.
CHRIS
Wow, I am so glad I found this blog. I love the feedback, it certainly is helpful. If I thought I was confused before! I see both sides with the hoa. The iron stone area is nice, and I am trying very hard to look at homes as a business transaction, which I learned from this blog. I was shown a forclosed house and there was an aquarium in the living room with dead fish, yes dead fish! They where pretty big, not goldfish! I thought another victim of the housing issues.I have looked at homes where everything has been taken, even the outside door bell switch and light bulbs. It has been an interesting journey. I will send along the mls #’s too as I would like the opinions. I will also low ball, I mean what can I loose right? Gender on Future buyer…female like me?
chris
BanteringBear
Chris posted:
“Gender on Future buyer…female like me?”
I knew immediately after I posted “buddy”, that I had probably erred. I have no idea why I assumed “Chris” was a male. My apologies.
CHRIS
Well, my first offer at buying a house fell through. I tried the under 100.00 per square foot offered and was told there was an offer and I could make my offer higher, but I said no. This was a house on Dominus, it was listed for 165,000, my problem is I am conservative and I do not have a big problem with HOA but as I said before this has 2 so I figured that into my budget, along with the taxes which where 2800.00. I may be wrong so I am here at this wonderful blog to ask for some advise again… I have a issue with paying more than the 100.00 psf, and if I am going to pay 40-50 for hoa fees ok, but when it gets to the 100.00 or more per month, I want to put that towards more house payment. Am I off my rocker to think this way? Is there a “formula” for submitting a fair offer? Thanks for any and all advise!
Chris
Sully
Chris, unfortunately there is no tried and true method. Its all trial and error. You didn’t mention if the house was a retail sale or bank owned.
As far as your issues, I agree with you. Just keep trying. Some one posted a while ago that REO’s were selling for about 92% of list price.
I have seen some listed at a 30% discount to the original loan. Depends on bank I guess. Fanny and Freddie seem to be the hardest to deal with right now – that may change in the near future. IndyMac has been sold for about 50% of its (once upon a time) assets.
As far as I can see you did good on your first try!
Corina
Chris, $100 per month in HOA fees for a house in the $165K price range seems quite high to me. I think you are spot on in your thinking that this is too high. And remember, HOA fees only go up over time, they never go down.
As far as paying more than $100 a sq. ft., most of the market is still above that right now, but I think you can find a good house in a good neighborhood within that price guideline if you keep up your search. Remember, there is no hurry at all. Tell your realtor to search only in that price segment and see what is out there. If that is what you feel secure with, stick to it. Don’t look at houses you can’t afford. There is nothing worse than falling in love with a house that is outside your affordability. So don’t even look.
Waldo
Chris, consider this. You are talking $100 per month in HOA fees. You could borrow another $20,000 at 5.5% for 30 years for about another $100 a month. In other words, if you bought a house that has no HOA fees, you could borrow about another $20,000 and still be the same out of pocket every month. Now yes, you would be taking on another $20,000 in debt, and I’m not one who says the only thing to consider is the monthly nut and nothing else. But it is something to consider. Best to you.
Sully
Another interesting fact: the house on Dominus is currently owned by the NEVADA AFFORDABLE HOUSING TRUST. Makes you wonder what a section 8 housing program is doing buying houses in a 100/month HOA!
I suspect they are getting their guidance from California. 🙂