Diana Clement: Top 10 things to affect value of your home

[muppet]

Diana Clement: Top 10 things to affect value of your home

By Diana Clement
5:30 AM Saturday Feb 11, 2012
Someone who owns a home and gradually pays it off is building up capital for their retirement. Photo / Getty Images


A home is most Kiwis' biggest investment. Much of its value is determined by local market conditions. There are ways, however, to enhance (or depress) that value.
I know that suggesting a home is an "investment" irritates people who don't see lifestyle assets such as the house and bach as investments. The reality is that someone who owns a home and gradually pays it off is building up capital that will make a difference to his or her standard of living in retirement. Or as Alistair Helm, chief executive of Realestate.co.nz, says: "A mortgage is a forced savings scheme."
The 10 biggest things that affect the value of a home include:
Development.
Improvement of public spaces.
Bad smells.
Anti-social neighbours.
Illegal extensions.
Natural hazards.
Black marks on your Land Information Memorandum (LIM) or council file.
Desirable schools.
Kitchens and bathrooms.
Extensions and alternations.

Read more in the Granny at

http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=10784742

[donna]

We have two houses in our street up for sale - one that has extensive work done on it and if they'd got $1.1m they would nearly break even - however they will now accept offers over $790K (that's a massive $300K loss) and right next to it another property on the market at $380K - in need of some work and probably on the market under it's real value for a quick sale.

It's interesting how people get it so wrong - some over capitalise others just don't do the research to find out it's true value or they are just impatient and think if they price it lower than it's true value they'll get a quicker sale - not always true aye.

cheers,

Donna

[Perry]

Doing the Same with Less!

The reality is that someone who owns a home and gradually pays it off is building
up capital that will make a difference to his or her standard of living in retirement.

How real is that statement?

Sure, owning the home one lives in when retirement age comes around is one helluva
lot better than renting. But the retiree[s] have to live somewhere! The capital that's
in the home can only be realised by selling. And that realised capital will have to be
consumed (in part at least, if not wholly) to buy another roof-over-head. Only what's
left over (if any) can contribute to 'standard of living.'

I think that a mortgage-free home at retirement can be as much a millstone as it may
be renting. Those expenses, R & M, rates, insurance, etc., now have to covered with
a pathetic pension, if no other arrangements have been made. So no, I don't agree
that a mortgage-free home at retirement is any guarantee of better standard of living.

[One]

You can borrow against the house if you have to. But yes, I agree about R&M being freaky!

If you've got other savings, that could be better than having a house. It's a big if.

[Perry]

Be interesting to assess the costs factor.
Single pensioner in own home, debt free.

Pension:

Rates
......Property:
.........Water:
Waste water:
Insurance:
Electricity:
Food:
Lawn mowing:
Telephone:
Home help:
Other R&M:

Deficit/surplus:

[gavinc]

Perry - As I see it renting in retirement (or even younger) is not ideal because you can be asked to move at any time. You bloody landlords (yes I am one also) can sell a property with only a few months notice from under a tenant - this must be/is very unsettling for people renting especially older people such as yourself wanting some permanence.
A pathetic pension - I think not-it is pretty generous by world standards and not means tested

[Perry]

But it's also taxed, after aggregation with any other income. I agree that
renting is far from ideal. I mentioned that only as a comparison. Own, rent
or rest home. Are there other options beside a small plot? Move in with
the children? That used to be common.

And the NZ pension is subsistence level and only just that. One only needs
to ask around. Health care costs are a biggie for the elderly. My late wife
(elder health care) heard more sad stories than she wanted to. Small things
like not being able to buy presents for grand children; only being able to
visit out-of-town children if they paid for the transport costs . . .

The Dutch pension is far more generous, as I understand it.

Surely, being a PI does have some benefits, despite the mendacious and
rapacious efforts of politicians and the palpable pro-tenant bias of the TT
Kangaroo Kourt Klutzes. But it also carries a fair share of responsibilities
along with it.

older people such as yourself???

'ere - watchit!

[donna]

Most need to move from their family home anyway as it is too big etc so downsizing is the now the norm. Ideally the family home is worth more than the 1 bed unit or equivalent and so there's some $$$ left over to prop up the pension etc.

I know of a couple of couples who have sold up the family home and moved into Wgn city apartments - close to amenities, safe etc.

cheers,

Donna

[klauster]

As gavinc already said, renters have no control over their home - it depends on the LL and can be fatal when retired.
An owner-occupier home is a lifestyle decision. Everybody should know in the meantime that the average rental stock in NZ is totally below any standards (frankly, a shelter against rain and wind). Now, the decision not to depreciate assets for LL businesses is another blow in the wrong direction. Why should a LL put money on a rental and don’t get paid for wear and tear (costs for improvements), right?

And then the discussion about “over capitalization” – that has a meaning for investment properties but for owner-occupiers is it a question of lifestyle and living comfort. 13 years ago I “over capitalized” my place of residence with double glazing, proper insulation and plumbing, solar + wind power, vegetable garden, glass house, smart home security, landscaping – you name it, if I need it – possibly I’ve got it. Nobody will pay for my toys if I need to sell – but warm and healthy living conditions are priceless as well as my comfort today or tomorrow in retirement. In retirement I can half my living costs easily – powered by sun, vegetables from the garden, and fish from the sea… What can you save in a cold and damp rental? My home pays me every month.

Agreed, you can cheap rent or live for free under a bridge – but for me a home is firstly a place to fulfill a life not only to live like a “grasshopper” if you know the fable. I work and pay for it.

[klauster]

When not knowing the grasshopper fable

http://klausterproperties.info/rent-vs-buy/r10-tough-times-for-renters.htm

[JABlog]

Retirement savings by asset class

Top five investments outside KiwiSaver

Bank cash or term deposits (47 per cent)

Another superannuation scheme (31 per cent)

Residential investment properties (not the family home) (28 per cent)

Directly owned shares in public companies (23 per cent)

Source: Massey University report: KiwiSaver Consumer Choices, based on UMR Research survey

Sixty-one per cent of respondents to a UMR Research survey saw the family home as part of their retirement assets, and more than a quarter (27 per cent) said they owned at least one residential investment property

[KatieR]

With the cost of rents rising, how can a pensioner today afford it? The elderly can always choose to sell a house that has become a millstone, but can't afford to buy if the rent is too much, or the agent won't put in a wheelchair ramp....
I've only been in my own home a month, and for the first time ever I have an insulated home with a functional kitchen - really good for my health and even if I never sell it, the mortgage will end and the costs are less than rent. Much, much less....

[Perry]

. . . but you have a range of costs that
go with the privilege: rates, insurance,
repairs and maintenance, etc. It's always
a bit of a balancing act, deciding to buy
or rent.

[donna]

With the cost of rents rising, how can a pensioner today afford it? The elderly can always choose to sell a house that has become a millstone, but can't afford to buy if the rent is too much, or the agent won't put in a wheelchair ramp....
....

It's probably why retirement villages are so popular - the apartments or units with small gardens are affordable if you're selling your family home and there are fixed monthly costs - but everything is taken care of - including your main meal for around $10.

The resale of your unit or apartment is the big issue - these villages lock you in to receive no capital gain at all! So you get back what you paid - minus $40K or more for the refit (replace carpets, curtains etc).

Probably still a better deal than the reverse mortgage option. This way you can sell your home - give some $$ to the family, get your unit or apartment and your family are still to gain some $$ from the resale too.

Cheers,

Donna

[speights boy]

It's probably why retirement villages are so popular -

As evidenced by their share price.