patrick.net

I'm in a house built in the fifties, it's built like a fort.
reinforced CB exterior walls, rigid plaster 6 inch thick internal walls, Termite resistant Dade county pine rafters, barrel tile roof, terrazzo sub-floor.

It's the old houses that withstand hurricane after hurricane, but it's the shinny new gated communities that lose their roofs and become rubble heaps after even a thunderstorm.

My Dad does contract repair work on houses and from what he's told me, almost all of the new houses are total crap- as in stuck-together boxes. He says he's seen so many new houses that are already in need of major repairs after one year. This is in the South where they love to build just tons and tons of generic Mcmansions, but I would imagine that some of this holds true elsewhere.

Shoddy jobs would be done by the builders to ensure their profit margins stay or get better upon constructing the house.

Unless the builder is trustworthy, I'd be very keen to figure out all the cost-cutting measures they would employ to intentionally or otherwise, screw the buyer.

The GOP says

It's the old houses that withstand hurricane after hurricane, but it's the shinny new gated communities that lose their roofs and become rubble heaps after even a thunderstorm.

I don't think the data actually agrees with you on this. Modern codes are much more stringent at least with respect to hurricanes, and you can get modern materials that are just plain better (e.g. Hurriquake nails).

edvard2 says

My Dad does contract repair work on houses and from what he's told me, almost all of the new houses are total crap- as in stuck-together boxes. He says he's seen so many new houses that are already in need of major repairs after one year.

See, I don't disagree that some new houses are of lower quality. It's just that I think they'd hold up to hurricanes better per what I said above largely because of code, not because of materials and workmanship.

On the website, I can found the estimate/value calculator/ rental comps .... but lack of
New vs. Old. As " the house/condo in same city (location), in southern Californal next to
each other but one is build in 2008 and the another is old (build in 1977-1989) then the
price value must be different and the rental must also be different too. "

Is there any calculator or advice on how different (how many percent in price) from the
renting and/or the value of the New house/condo vs Old house/condo in same location,
Southern Cali?

The fact of the matter is that in somewhere like SoCal or NorCal, it's hard to find this difference because it's so rare to have an old house and a new house in the same location. My experience is that, at least in the heavily populated areas, there are some random empty plots of land in these two metro areas that developers overcrowd with new housing. Sometimes this new in-fill housing doesn't quite match existing housing -- it could be more dense, it could have smaller lots, etc. That means it's hard to compare old and new in the same location.

Also, I've noticed that some of the random plots are subpar plots that no one wanted to really live on. For example, right next to the freeway, right next to active train tracks, right next to a massive commercial complex, right next to other negative locations.

I do wonder if there is a "new house smell" premium. It's hard to tell somewhere like San Francisco because prices have dropped on condos so hard already, and it's hard to isolate the market drop from new vs. old.

Many of new houses are built in quality similar to new appliances (built somewhere). New codes focus on structures, pipe connections, electric wiring, insolation, but give uncontrolled ride for builders in material choice. National developers save money on absolutely everything possible, all goes in volume. Every additional wall, thickness of sheetrock, every saved nail, all counts out. E.g. KB Home developed slab foundation to save on construction costs. Neither less have I preferred newer houses, mostly due to layout and modern heating/AC.
There is nothing worse than neglected old house.
For valuation purposes I’m subtracting 1.5% per year on older houses, but improvement should be added to value.
Anyway, some well-built old houses, well taken care of, systematically improved plus in great location can be a fantastic deal.

Houses aren't priced at real value, now it's all just fantasy selling price points for suckers... 299, 329, 349, 399, etc

On the website, I can found the estimate/value calculator/ rental comps .... but lack of
New vs. Old. As " the house/condo in same city (location), in southern Californal next to
each other but one is build in 2008 and the another is old (build in 1977-1989) then the
price value must be different and the rental must also be different too. "
Is there any calculator or advice on how different (how many percent in price) from the
renting and/or the value of the New house/condo vs Old house/condo in same location,
Southern Cali?

It's a two step process as you must understand what exactly is the median anyway. Is the median point a house, new condo or old village type apartment. For example, when Patrick's data says median rent 2BR in Mountain view is $1,900, I visualize it as a village style two story aparment built in the 1970's.

That's sort of like par value. Then you must assign a premium or discount against par based on available information (Craigslist, redfin can give you lots of data and clues what the increments are). A condo built in 2008 is surely above par but besides just being newer, I would look at ceiling height, walls thickness as other tangible difference in a condo built in 2008 vs. 1977.

FortWayne says

Houses aren't priced at real value, now it's all just fantasy selling price points for suckers... 299, 329, 349, 399, etc

That is absolutely correct but not everywhere in America.
I observed one national builder, who was selling almost identical floor plan for $699K in 2006, for $599K in 2009 and now for $399K and still makes money. LOL.

Two words on new houses.

Chinese drywall.

REpro says

For valuation purposes I’m subtracting 1.5% per year on older houses, but improvement should be added to value.

Need more advice: For example, both (new & old)condo/house in same quality, same city (only 2 block away),
same sq. ft, the new 2005 price is 500k then the old 1990 price
should be (500k - (1.5%(20 year)) = 350K.
Am I correct ? please give advice.
Also, please give advice on renting, how many % per month different between old vs new.
THANKSss

Kimm says

Need more advice:

Nothing is really simple in RE valuation like many folk think. One valuation is based on rent and another on replacement costs. This is the simplest way:
Base on rent is easier. Look on house/condo from perspective that YOU are the prospective renter knowing current market. You will definitely look on how many bedrooms, bath, quality of floors, appliances, etc. house have, and then how match YOU be willing to pay rent for. Go and see both; old and new houses. Now you can arrive with %/mo. difference. Also take in account square footage.
Replacement cost is more complicated. Start from brand new or almost new comparable development. From sales price of new house deduct land value which represents in typical urban development about 20%. This applies to house and condo as well. Also the same value of land take as a base for older house (land cost is same for old and new, improvement loss value). Now you valuating just improvement part of old house. Divide floor area per sf to be easier. Take off 1.5% per each year for being obsolete, wear and tear, to arrive with residual value of improvement. Now if you see recent improvement e.g. new A/C (non-Freon) is expense of about $7K, new boiler $1.5K, new carpet ($ depend on quality) etc. add it to your valuation. On the end add land value previously calculated. I hope this is will help you.

FortWayne says

Houses aren't priced at real value, now it's all just fantasy selling price points for suckers... 299, 329, 349, 399, etc

Scanning through more than a million asking prices in my database, we find that realtors absolutely love to put a 9 in the thousands spot:

+-----------+----------+
| thousands | count(*) |
+-----------+----------+
|         0 |   281287 |
|         1 |    18693 |
|         2 |    43538 |
|         3 |    29091 |
|         4 |   154511 |
|         5 |   347462 |
|         6 |    26465 |
|         7 |    50596 |
|         8 |    76094 |
|         9 |   723358 |
+-----------+----------+

It just feels so scammy.

In case you're interested, here's the sql I used to generate that:

select floor((price % 10000) / 1000) as thousands, count(*) from forsale group by thousands;

"Houses aren't priced at real value"

Sure they are.

Not in the Fortress necessarily, but post-crash prices are in-line with the income potential of the property as a rental.

Here's a house that recently sold in a nabe I'm familiar with:

http://www.redfin.com/CA/Santa-Cruz/1808-Hector-Ln-95062/home/2256267

has a fully-amortized monthly expense of $2400/mo.

That's to buy. Eliminating principal repayment (a form of savings), reduces the monthly expense down to $1750/mo starting out, with an average estimated cost of ownership over the 30 year loan term at ~$1250/mo.

Buying an awesome home like this for $1250/mo average cost!

Incredible steal, as long as the local economy doesn't tank from here.

Note these numbers are with 3.75% interest rates.

With rates at 8% like they were 10 years ago, this house at $430,000 would cost $3000/mo fully amortized and $2000/mo averaged over 30 years.

QUITE a big difference!

The GOP says

I'm in a house built in the fifties, it's built like a fort.

reinforced CB exterior walls, rigid plaster 6 inch thick internal walls, Termite resistant Dade county pine rafters, barrel tile roof, terrazzo sub-floor.

It's the old houses that withstand hurricane after hurricane, but it's the shinny new gated communities that lose their roofs and become rubble heaps after even a thunderstorm.

William E Baughb

Um, Dade county, FL? I don't know much about real estate in CA, but in FL old houses are not better made, at least in general. Some of the old houses are really rickety. I wouldn't consider buying any house in South Florida that was made before 1993. After Hurricane Andrew hit in August of 1992, a lot of building codes were improved to prevent such devastation from happening again.

go to Pebble Beach. You will find homes from the 40's and from today - all mixed together. All were built with unlimited money and best available designs and materials. The older homes are TWICE the home as any newer home. Hands down. In my opinion.

Bellingham Bill says

That's to buy. Eliminating principal repayment (a form of savings), reduces the monthly expense down to $1750/mo starting out, with an average estimated cost of ownership over the 30 year loan term at ~$1250/mo.

How many people live in the same house for 30 years? Most pay largely interest in first 10 years.

Bap33 says

go to Pebble Beach

Pebble Beach represents less than 0.01% of all old housing stock.

REpro says

How many people live in the same house for 30 years? Most pay largely interest in first 10 years.

doesn't matter. With principal paydown you can take your equity to your next house.

So the cost of moving is the transaction fees.

My solution is to buy where I want to retire : )

Bellingham Bill says

So the cost of moving is the transaction fees.

Plus sales commission, title insurance, last minutes repairs and holding cost, will eat half or more of your build-up equity.

There are a few potential problems with older houses that you should consider.

* Lead paint and asbestos can lead to all sorts of headaches when doing building modifications or repairs in the future, especially in highly-regulated California.
* Cast iron plumbing doesn't last forever, and replacement with copper can be quite expensive, especially in highly-regulated California.
* Old electrical systems can be expensive to upgrade, especially in highly-regulated California. Even if you don't mind non-grounded plugs, you may find that the number of circuits and maximum load of each circuit can be limiting. Rooms might have fewer outlets than you wish.
* Central heating is much nicer than wall-based room heaters. You might also want air conditioning, which may additionally require upgrading the electrical system substantially.
* Double-paned windows and insulation in the walls and ceiling are probably a good idea if you get air conditioning. That can get expensive too.
* Converting an old-style roof system to a new composite shingle system can cost considerably more than a simple re-roofing, especially in highly-regulated California.
* Any "wear and tear" items are likely to need replacement sooner than if you bought a new (or newish) house. A worn out roof isn't something you can just let go, since you're likely to be in for a major hassle and cost by the time you discover a leak. Appliances such as furnace, hot water heater, garbage disposer, and dishwasher have a definite lifespan. Hot water heaters and disposer, like a leaky roof, can cause costly water damage.

If you're tempted to rent out an old house, you might find that your tenants aren't experts in home maintainance. They will wait for something to break completely before taking any action, and the action they do take is merely to call the landlord. For example, instead of worrying about a slightly leaking hot water heater, they will wait until a flood of water is pouring out over the floor.

corntrollio says

don't think the data actually agrees with you on this.

What data, do you have data? I'm living in a neighborhood, that has houses here, that have seen every hurricane going back to 1927. Houses from the 50's with original roofs. Crap built in the late 70's and 80's and early 90's, blew away when Andrew rolled through.

The GOP says

Crap built in the late 70's and 80's and early 90's, blew away when Andrew rolled through

I agree that the houses built in the 1970s are crap, but there sure are a heck of a lot of them in Boca. So I can't say they blew away with Andrew.

edvard2 says

My Dad does contract repair work on houses and from what he's told me, almost all of the new houses are total crap- as in stuck-together boxes. He says he's

Something similar here. My dad does upgrades on old houses. He does major repairs on newer houses; usually to correct flaws that will result in more damage if not abated.

He's been hired to go to Las Vegas to correct the same flaw on 1 entire block of houses. Those houses were pretty new then.

vain says

He's been hired to go to Las Vegas to correct the same flaw on 1 entire block of houses. Those houses were pretty new then.

What was the major problem? Kitec plumbing?

madhaus says

Two words on new houses.

Chinese drywall.

Plus central heat + air, no single pane windows, no 1950s pink tile bathrooms needing "freshening", with kitchen space and plumbing to accommodate garbage disposals + dishwashers, and with grounded electrical systems.

The c 2001 home I bought was a lot nicer than the last 1950s property I rented.

Attempting to fix something in old house is a little of poker game. You never know what else fix should be along. Hard to predict cost of repair and parts needed.

cab says

What? Not in decent San Francisco neighborhoods. Condos are quite a bit more expensive to buy than an older house. Probably because they're new or renovated and mostly in move-in condition. Look on Redfin. Far more per square foot than a SFH.

94123 houses: $889/sf (selling prices)
94123 condos: $730/sf

94115 houses: $913/sf
94115 condos: $656/sf

Those are two of the most decent SF zips, Marina and Pacific Heights. I think you forgot land is a component in home cost.

Data source: Redfin. Be sure to choose the House or Condo tabs to get the price per sf.

http://www.redfin.com/zipcode/94123
http://www.redfin.com/zipcode/94115

corntrollio says

I don't think the data actually agrees with you on this. Modern codes are much more stringent at least with respect to hurricanes, and you can get modern materials that are just plain better (e.g. Hurriquake nails).

I don't disagree the codes are there, but are they enforced? During the building boom the house inspectors were often so overwhelmed they signed off on housing inspections on houses they never even walked into. While a custom build house can be better built than anything build in the 50's, few are. Most homes are tract development houses. During the boom, there was such a shortage of experienced builders that unlicensed, unqualified, inexperienced people were building these houses with minimal supervision. I read one story where the developer wasn't paying the pest control contractor enough for him to even pay for his chemicals to treat the houses for termites. He signed off on hundreds of houses he never even treated.

SFace says

... I would look at ceiling height ...

Although high ceilings are nice they are energy hog when trying to heat your house. My father-in-law's has a house were every room has 12 foot high ceiling, even the bathrooms, but his energy bills are twice what mine are, even though our house is bigger than his. And we both have geothermal heating.

Dan8267 says

After Hurricane Andrew hit in August of 1992, a lot of building codes were improved to prevent such devastation from happening again.

I highly doubt that the newer building codes will prevent hurricane devastation. There may be less it, but I read that in some areas the hurricane ripped up the asphalt and concert right off the streets, turning them into dirt roads. I don't believe any building code is going to protect a house from that kind of force.

KILLERJANE says

I bought old. I only want new now. Old is a pain. It is constant effort to keep. 1923 built bungalow. I will take new any day of the week. Never want old again.

I thought you all were talking about houses? Not our spouses...

One thing to avoid in some 1970 era houses, aluminum wiring. Its thicker, less flexible and breaks easily. I hated working with it.

My prediction is that in 2025 people will say exactly the same thing as they are saying now, about 20 year old houses versus new houses.

"Houses built in 2025 are much worse quality than those built in 2005. They really knew how to build houses back then".

Dan8267 says

The GOP says

Crap built in the late 70's and 80's and early 90's, blew away when Andrew rolled through

I agree that the houses built in the 1970s are crap, but there sure are a heck of a lot of them in Boca. So I can't say they blew away with Andrew.

Andrew didn't hit Boca.

If you want to know what houses are being built with today, just go to Home Depot, and look at the materials. Cheap Cheap cheap crappy shit. Then find an employee, a knowledgeable one for bonus points, and ask them to show you the "GOOD STUFF".
When you're query comes up empty, go to Lowes and see if you fare better.

Now I'm not suggesting that, there are not quality materials out there, but unless your consciously paying a 50% or more premium for those materials. You're house is being built with the flavor of the month cheap crap. Regardless of your zipcode.

Look you can place hurricane straps on toothpicks, but will that really make you safe when a Hurricane comes through?

I think the best thing new houses have going for them today, is the storm proof windows. But unless you've got big bucks for them, most houses don't have them. And if you want style in Storm proof windows, expect to pay 70% more for windows that won't make your house look like a Habitat for humanity project.

justme says

My prediction is that in 2025 people will say exactly the same thing as they are saying now, about 20 year old houses versus new houses.

"Houses built in 2025 are much worse quality than those built in 2005. They really knew how to build houses back then".

You're kidding right?
Many of those McMansions are build with Styrofoam facades, that are stuccoed over to appear to be elaborate mason work.

Who in the hell says, they really knew how to build cars in the '80s?

MY problem with many 1950's houses is the design is "traditional" not open floor plan. Here's your tiny formal dining room, your formal living room, your den, the kitchen buried way at back so decent people don't see it.

So to turn it into something I consider liveable and friendly means gutting the interior and repartitioning. Not trivial, would rather build from scratch.

True but there's still a lot to be said for Plaster and Mason walls, floors that wont dip, bow, or crack. Or floors that if nothing else you could strip and polish as is, and they would still look fine.

You can take older houses, due solely to their construction materials, and have angry previous owner try to destroy it.
At best they will knock a few holes in a couple of walls before they wear out to exhaustion. I've seen new homes built in 2005 totally gutted, of sheet rock, wires, plumbing and look they would never be livable again. You have to burn down an older house, or neglect leaks, to achieve that level of destruction.

Which oddly enough never happens to old houses unless arson is involved. Although they say older houses electrical circuitry is dangerous, there's not a lot of fires to back it up. Unless the people had rats that gnawed on the wires or built nest and created moisture and corrosion that created shorts.

Another great thing about 50's houses, they were all most all built in a time, when Homeowners had more rights over what they build and do on their properties. Most of which are still grandfathered in to their city codes.

Like build or have, additions, MIL quarters, studios, efficiencies, apartments and more things they can do, and usually have the yard to do so. My brother just bought a new house out in Colorado.
He told me, that if he opened his window on the side of the house, and the neighbor did the same, they could hand off sugar.

This is out in Colorado, I think of big wide open spaces. What are they building houses 6 feet apart in Colorado for?
I'm in a densely populated area of the country, but I've got 10,000 sq ft of yard I can grow and create my own Tropical sensation.

Most of the new communities look just like the pictures of neighborhoods in every other part of the country. Who moves to South Florida to live Columbus Ohio?

FortWayne says

Houses aren't priced at real value, now it's all just fantasy selling price points for suckers... 299, 329, 349, 399, etc

I am confusing; If the houses aren't priced at real value then we can not compared Old vs New house ....?. Also, on "http://patrick.net/housing/calculator.php" is not base on New or Old house but it is base on all the property surrounding on that area only.....?
It seem missing something.....please give advice, thanks

Sincere Thanks for your Kindness

Yes my lord.

King Patrick will answer you my Lord.

The GOP says

What data, do you have data? I'm living in a neighborhood, that has houses here, that have seen every hurricane going back to 1927. Houses from the 50's with original roofs. Crap built in the late 70's and 80's and early 90's, blew away when Andrew rolled through.

What kind of roof? Flat roofs, for example, do far better in hurricanes than gable. Hip roofs do better than gable roofs. Many gable roofs failed -- this has nothing to do with the quality of the house, but rather the design. Some of the biggest code changes involved gable roofs.

In addition, other changes, such as bracing roofs, reinforcing garage doors, improving door frames, and requiring break-resistant windows also will greatly reduce the number of roofs flying off. Bet many old houses don't necessarily have these protections.

They did a study with Hurricane Charley and houses built after the 1996 (after code changes) did better than those built before. In addition, insurance rates are lower for the newer houses too.

Don't get me wrong -- there were some practices that were shoddy for newer houses in the 80s/90s. A great example is stapling certain roof materials, instead of nailing them. Some people are willing to buy cheap houses, no doubt -- it's easy to build these things to a higher standard if you're a smart buyer, and probably without that much additional cost in many cases.

cab says

What? Not in decent San Francisco neighborhoods. Condos are quite a bit more expensive to buy than an older house.

Are you serious? Do you read SocketSite where these condos are detailed all the time? Condos as a whole have been hit far harder than single-family homes in SF. I've seen very few houses that have dropped in value 40%, but there are plenty of condos that have.

Peter94087 says

Lead paint and asbestos can lead to all sorts of headaches when doing building modifications or repairs in the future, especially in highly-regulated California.

Isn't lead paint EPA regulated, not CA-regulated?

I know Cal-OSHA regulates asbestos, but I'm not aware of specific changes in California that raise costs. Do you know?

Peter94087 says

Cast iron plumbing doesn't last forever, and replacement with copper can be quite expensive, especially in highly-regulated California.

What specific things make California plumbing more expensive? California is largely based on the uniform plumbing code, although there are certainly amendments to it. I can think of one particular thing, but what all would you specifically cite?

Peter94087 says

Old electrical systems can be expensive to upgrade, especially in highly-regulated California.

Same question -- the California code is based on the National Electrical Code. What changes raise costs significantly here?

Peter94087 says

Converting an old-style roof system to a new composite shingle system can cost considerably more than a simple re-roofing, especially in highly-regulated California.

Same question.

TechGromit says

During the building boom the house inspectors were often so overwhelmed they signed off on housing inspections on houses they never even walked into. While a custom build house can be better built than anything build in the 50's, few are.

In California, 50s houses generally suck too. Post-war California 50s houses are clapboard pieces of crap built during boom times. Most boomtime houses are pieces of crap, regardless of when the boom occurred. The goal is to put them up ASAP and cut corners if you have to.

justme says

My prediction is that in 2025 people will say exactly the same thing as they are saying now, about 20 year old houses versus new houses.

Agree.

The GOP says

If you want to know what houses are being built with today, just go to Home Depot, and look at the materials. Cheap Cheap cheap crappy shit. Then find an employee, a knowledgeable one for bonus points, and ask them to show you the "GOOD STUFF".
When you're query comes up empty, go to Lowes and see if you fare better.

Most of the contractors I know do not go to Lowe's, but rather go to local stores that have better materials. Lowe's is for DIYers more than contractors, I'd say.

The GOP says

If you want to know what houses are being built with today, just go to Home Depot, and look at the materials. Cheap Cheap cheap crappy shit.

Other than being really wet and cut young there isn't too much difference between dimensional 2x4's and 2x6's lumber today vs 70 or 80 years ago.

Insulation and weather proofing is generally lots better on newer homes too. Windows are a big improvement even if they're made from vynil.

The big difference with today's vs older homes is the quality of the workmanship. Homes were generally built to tighter tolerances and more attention was paid to details. The thing is after 70 or 80 years even a well built home will be showing its age, so its usually better to buy new for most people. Just make sure you have the home inspected prior to buying it and get insurance/warranty.

Checking for stuff like roof being done in sub par Mexican tar paper is one of those things that most building inspectors will miss for instance but you won't 5-10 years down the line when it starts to leak.

Personally I'd love it if stick construction would just die out. I don't even much like SIPs. I think ICF's or block is the way to go for the most part.

The GOP says

justme says

My prediction is that in 2025 people will say exactly the same thing as they are saying now, about 20 year old houses versus new houses.

"Houses built in 2025 are much worse quality than those built in 2005. They really knew how to build houses back then".

The GOP says

You're kidding right?
Many of those McMansions are build with Styrofoam facades, that are stuccoed over to appear to be elaborate mason work.

Who in the hell says, they really knew how to build cars in the '80s?

Perhaps I should say it this way:

At any year Y there will be lots of people claiming that "houses in Y-50 were built much better than the crapboxes they are building today".

I think it is a combination of selective memory, forgetfulness, survivor bias and maybe some other factors I haven't thunk of. Substitute some other number than 50 if you want, but the general idea is the same.