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Asked by C. Watkins, 03054 Tue Feb 5, 2008

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5
Carl Johnson, , Amherst, NH
Tue Feb 5, 2008
BEST ANSWER
For Merrimack NH the average price of a single family home (excludes condos) sold in 2005 was $331,486. In 2007 it was $310,243. This represents about a 6.7% drop in Price. As stated earlier every home is different and you should have a market analysis done on your home to find what it will most likely sell for.

If you want to see a complete report on the market in this area you can get a complete report for the towns around Merrimack at the link attached below. Go to the bottom of the page to download the full report

I also have a report for all the towns in New Hampshire on the web site. Look for the statewide report
0 votes
Dane Hahn, Agent, Englewood, CO
Tue Feb 5, 2008
I say this over and over, but remember this: You make money when you buy a home--not when you sell. You can buy a home "right" but you can' never sell a home "right". You will never get more than the market. dictates or is willing to pay.

Right now unless you bought right in 2005, you will probably get 7 to 10% less than you paid. If you have made improvements, you may get some money back for them--(think 50% to 85%)--depending on what you have done and how well it was done. It is unlikely you will see your improvement money back, dollar for dollar.

But a home is not an investment. No matter what anybody says. It's your personal residence.

An investment is normally speculative, and as values go up and down investors buy and sell based on the market. Unless you are willing to buy and sell homes on a moments notice, don't call you home an investment. Homes can be investments, but your personal residence should not be viewed that way. Homes are generally not liquid investments, and are usually hard to sell. (Think how many days would it take to sell a house vs. selling stocks which can be bought and sold in a day)

If you insist on thinking of a home as an investment, remember your home has generated tax savings each year, so you should adjust for that and also adjust for the rent you didn't have to pay during that time period.

So for example, if your house cost you $300,000 in 2005, and is valued at $270,000 today, remember that if you were renting a residence in the $2,000/month range for 36 months, you would have spent $72,000 on rent. And the savings in taxes (for mortgage interest deductions) over 3 years would be in the range of $1800/month, or would have "sheltered" about $65,000 in income, saving the average person another $22,000 in taxes. So from an investors standpoint, you lost $30,000 in house value, and gained about $94,000 in savings. And you had a place to live--it's still worth doing!
Web Reference:  http://www.daneandsandra.com
1 vote
Walstmnky, Home Buyer, 07093
Tue Feb 5, 2008
Mr. Hahn:

you started your post with two great ideas:

- you make money on the home when you buy "right",
- and despite what everyone else might say, a home is a primary residence, and not necessarily a good investment vehicle.

Many real estate professionals would have difficulty agreeing with those points, so I salute your straight-forward talk in that regard.

However, with respect to your buy-vs-rent analysis, I am going to disagree with your numbers.

Let's assume a house purchased in 2005 for $300K, with montly payment of $2K, inclusive of RE taxes and insurance. Let's also assume that house price is down 10%, i.e. would sell for $270K in today's market.

Let's calculate the net position of the house buyer.

I agree that the homeowner saves on taxes, but I disagree on the amount. In order to take a mortgage interest deduction, one itemize deductions and therefore must forgo the standard deduction. The standard deduction for a single filer is around $5000 (5150 for 2006, a bit less for 2005, a bit more for 2007). For married filers, the amount is double that.

Also, when itemizing deductions, INCOME taxes paid to state can be included. This would help someone itemizing. Unfortunately, New Hampshire does not have those, so this does not help a New Hampshire tax-payer who is itemizing.

Say the interest in the $2000 payment is $1800 (just like you noted). We have a deductible amount of $21600 per year. However, the standard deduction (assume couple) of $10000 needs to be foregone, making the EFFECTIVE deduction $11000.

Also, I disagree with the 35% "savings" for an average person. To save 35% on federal deductions, one must be making more than $300,000 in taxable in income per year! I would take a more conservation 25%.

So to recap, the ANNUAL savings in reduced taxes as a result of owning is only $3000, a far cry from the $7300 you claim someone would save.

Gained:
- $3000 / year in tax savings,

Paid:
- $2K mortgage x 12 = $24K / year in mortgage, etc (you forgot this line item entirely in your analysis),

Lost:
- $30K on the sale, plus transaction costs (Ok, I will "waive" the transaction costs),

To recap, we have 3 * $3,000 - 3 * $24,000 - $30,000 = - $93,000.

The renter's story is very easy. We have one line item:

Paid:
- $2K * 12 = $24 K / year in rent.

So to net, the buyer lost $21,000 more, a far cry from the gain of $92,000 you say he gained.
0 votes
Ron Fredette, Agent, Bedford, TX
Tue Feb 5, 2008
My opinion is the market has returned to 2004 pricing. With your home in mind, alot depends on what you paid. You may have overpaid...or (hopefully) gotten a great deal! Also is your property being used to it's highest and best value ? You home could have excess land, interesting to a developer...may be oversized lot, may have water & sewer...etc...why not have a realtor check into things for you? http://www.RonHomes.com
Web Reference:  http://www.RonHomes.com
0 votes
Suzanne Damon, Agent, Manchester, NH
Tue Feb 5, 2008
Overall the market has changed by 24% since mid 2005. We are currently in a "declining" market according to the Private mortgage insurers. We are declining on average of about 1% per month in the Merrimack NH area. In some other areas of NH the market is greater in depreciation rate per month. However, I am noticing a slight change in the market over the last 3 months. To say that length of time on the market is decreasing slightly and average list to sale ratios are a "wee "bit tighter than earlier last year.
Web Reference:  http://WWW.SuzanneDamon.com
0 votes
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