Sunday, 5 February 2012

What's your house worth? Part 1

Everybody knows houses sell for street appeal, kitchen and bath, granite countertops, size, age, nice neighbourhood, the usual reasons.  Here's a look at what else is baked into the price.

Title:   Secure and easy-to-transfer title is baked into the price.  In BC, a couple days is enough to safely and definitively transfer title.  In Cairo there are seven-storey apartments that have four official floors and three illegal floors added on top.  The upper units are bought and sold in an unregistered grey market for less than the sanctioned ones of the lower floors.  In Nigeria, people sometimes spray-paint NOT FOR SALE on the street side of their home to prevent someone breaking in and selling it off while they are at work.
What are you willing to fight for?  If you can't defend your land and family from trespass and invasion, the shelter you buy drops in value. Many are willing to hand this duty to a police force but only if it will successfully protect them and not place criminal charges if they tackle the job themselves.
The do-it-yourself option:  It was once normal to build your own home.  The less we do ourselves, the more dollarized the house becomes.  In the Peruvian countryside, everybody puts up a house from adobe bricks they made themselves.  You see them drying by the road at almost every home.  Our guide said there is NO MARKET PRICE for adobe bricks even though that's what the houses are made of.   Frugal handymen in Canada still put in "sweat equity" which is probably worth more per hour than they can earn at a paid job. It worked for me. I've seen a local credit union recognize sweat equity as part of a mortgage deal.
War and riot:  People abandon homes and flee when lives are at stake, preferring portable wealth and kin.  Fiddler on the Roof fictionalizes actual events in old Russia when Jews were driven off the land but were offered a pittance in payment for their homes.
Death and disease:   Subtract thousands from your asking price if people have died in it from murder or infectious disease.  The rarity of murder and fatal pandemics is a triumph of our culture and has a hidden role in raising the value of our houses.
Land or the improvements on it:   Land that people farmed on hunted on used to be more valuable than the structures on it.  The price of a typical city dwelling now is at least two thirds for improvements.  American Indians aren’t upset about losing some teepees and kickwillies.  They want back more of the land they made a living from. A native family I met used to have three homes a year as they moved from salmon to hunting to winter quarters.  Land has dropped in relative value as we no longer live off it and improvements situated near a paid job have gone up in value.  The things we do for a living determine how valuable our present house is. If you have to move regularly to find work in future, your house will become less valuable.

To follow:  ATTITUDES, POLICY and the BEHAVIOUR OF MONEY are also baked into the price of your house.

No comments:

Post a Comment