Buyer frustration has adjusted some goals as more look for homes they can tear down and replace, or ones with “good bones” they can remodel.
NEW YORK – Facing low inventories of homes for sale, some buyers will turn to homes with “good bones” – or even bad bones on lots they can use to make into their dream home.
Housing inventories are low and continue to drop. Total housing inventory at the end of April was down 10.4% from a year ago, according to the National Association of Realtors®’ latest housing report.
While many buyers may crave new homes with newer finishes, new-home construction has dropped too. As such, some real estate professionals are marketing their listings as renovation opportunities or as teardowns, The Wall Street Journal reports.
Last year, Lauren Ravitz, a real estate pro with Berkshire Hathaway HomeServices in Los Angeles, marketed a $6.595 million 1949 colonial home as “a rare opportunity to restore/remodel a timeless classic from a bygone era or to build a magnificent estate in one of the west side’s most coveted locations.” The home sold for $6.795 million. The buyer intends to tear down the home.
Buyers interested in either a massive remodel or teardown are considering the price carefully.
“Whether you completely rebuild or remodel, the finished home should be worth no more than three to five times whatever you paid to acquire the teardown,” says Ken H. Johnson, a real estate economist at Florida Atlantic University in Boca Raton, Fla. “Otherwise, you might develop way too much home for the neighborhood.”
The cost of a remodel can escalate and, if a home is in poor condition or outdated, the update may not make financial sense, agents say.
Agents advise that buyers considering a teardown or renovation should have a home inspection. Even homes for a teardown should be inspected because older homes may have been built with hazardous materials, such as asbestos or lead paint, which could significantly increase demolition costs.
Source: “Buying a Dream Home? In This Market? For Some Buyers, a Remodel or Teardown Makes More Sense,” The Wall Street Journal (May 19, 2022) [Log-in required.]
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