September 30, 2009

The Regeneration of Towns and Cities

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Urban Decay & Regeneration

Urban Decay & Regeneration

The economy has certainly seen better days. More and more people are losing their jobs, getting cut back on hours, and generally feeling the weakening of the present economy. This momentum has unfortunately transcended to all consumer markets, and made the consumer less able to not only afford larger purchases that they once could, but also feel comfortable about doing so. This shift in financial confidence has led more prospective home buyers to consider buying older homes instead of new construction homes.

This trend towards investing in older and more historic homes is due to the fact that older homes-quite simply are considerably less expensive. This means less of an investment, and less fear of financial ruin. People buy these fixers uppers, invest money in repairs and renovations, and boost the home’s value demonstratively. Fortunately, the specific home is not the only subject of boosted value, the same applies to the neighborhood it is housed in, and-with enough homes of this type-the town or city gets a boost in market value as well. With more regeneration of towns and cities, we can expect the revived real estate market to slowly breathe life into our faltering economy.

So, how does this exactly happen- this regeneration of towns and cities? Through the massive trend that is sweeping the nation: the purchase of older homes in the same area, i.e. same neighbourhood and city/town. It may seem that this sort of trend would be slow and random, but as the economy bottoms out, the purchase of older homes in economically stale areas is happening more and more…everywhere. This is because purchasing one of these homes is very inexpensive, requires-for the most part-relatively little investment (certainly when compared with purchasing a newer home), and allows a home buyer to increase home value while they wait for the real estate market to rebound. Let’s take a look at how a prospective home buyer might initiate a home renovation of an older home in one of these areas.

Location:

  • First off, a person in the market for an older home, would have to do their research on cities and towns that would help them recoup their investment in the home. They would research city/town taxes, any natural disaster issues that have occurred in the relative recent past, and overall how the city and town is handled by city officials to ensure the town/city is safeguarded and maximizing its potential.
  • Secondly, they would want to survey which neighbourhoods and areas-during a more booming real estate market and economy-had great sales and turnover. Finding a neighbourhood or area that has already set a precedent of being consistently valuable according to real estate market trends promises that it will necessarily be again-thereby promising a solid return on investment-if not resounding profit-once the market turns.

Market Trends:

  • A potential home buyer would want to educate themselves on what makes for solid value in a home-during a stronger economy. In short, what were prospective home buyers looking for in a home and what will they always be looking for? The staples of home value are the most general aspects of the home that will always provide value, that is: good neighbourhood, good schools, near a body of water, etc etc. These staples will always hold value, no matter how real estate trends go. They offer the potential buyer money in the bank for when the economy revives.

Value:

  • Particularly important to a potential home buyer is the home values associated with their intended property. This not only includes the history of the specific home that they are interested in purchasing and the history of this home’s value, but also the values of the homes around them. There are a number of questions that they should be asking themselves, such as: how often has this home been sold in the recent past? What have the selling prices been? Have they dipped or gone up? What have homes in the immediate surrounding areas sold for and how often? Is there a pattern in this, and what can it be attributed to? These are all necessary questions to being able to positively decide upon a particular home.

Repairs/Work:

  • Once the groundwork has been laid for the history of the home’s location (town/city, neighbourhood, etc), the next step is to evaluate the history of the home itself, and what repair have been done in the relative past ownership. Finding out these specifics helps the potential buyer evaluate if there is a pattern of repair that needs further looking at. For example, how many times in the past ten years has the sill had to be restored or plumbing reworked? If the answer is many times, there is obviously a larger reason, a more serious problem that the house is facing that could cause more long term stress than positives.
  • Secondly, what are the repairs needed now in the present to make the home liveable? How large and expensive are these problems? Are they mostly of an aesthetic nature or more structural? Invest in your own inspection specialist to ensure all potential and existing problems are evaluated. Knowing how much time, money, and effort you will have to invest in the home not only helps you make a fairer offer to the owner, but also helps you decide if the house is even worth the trouble and investment needed to make it a home.
  • Also, which features can you exploit? Many older homes have unused cellars that can be renovated & a basement conversion can add extra space and value to a home.

With the economy as it is now, real estate may have seemed to take a dip in buying and selling of property; but luckily there is still abundant activity. This activity-though not focused on high value newer homes-is built upon investment-building in older homes in stalemate areas. These neighbourhoods, towns, and cities of today will-through solid purchase, maintenance, investment, and renovation –be the valuable homes of a better economy. Home buyers are starting to take the real estate market into their own hands from economists and real estate marketers-to transform and create a more solid financial ground for themselves, their families, and the economy overall. It’s time to be a part of it.

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