For awhile now, I’ve watched the housing market escalate like crazy. My weekend hobby to look at model homes is probably where I first started to notice this tend aside from occasionally listening to podcasts that discussed our nation’s growing crisis with affordable housing and a sharp increase in homelessness in places like Los Angeles. One neighborhood, in particular, in our local area jumped in model home prices from $330,000 for a sub-2,000 sq. ft. floor plan in January 2020 to $483,900 in September of last year. By last month, the same exact floor plan, was marketed for $535,900. As a second time homeowner, I did look into whether now would be the time to sell our current home. The opportunity to look at downsizing a little, but not as small as our first sub 1,300 sq. ft. homes, was tempting.
The appraisal came in at a good amount: $524,000. It was less than what sites like Redfin and Zillow provided as estimates, and I am sure it would have been a bit higher than what sites like Open Door would provide as their goal to shortly re market the house to someone else for a profit. The rise in current home prices was an opportunity to look more clearly not only at our needs, but our wants. Could we afford a smaller space with at least the same size yard or larger that was ideally no older than our current residence? One of the best places we decided to start our search was checking out smaller new builds that offered condos. I know condos don’t seem all that popular in Arizona, but I would not mind one if it came with more than just a patio. It irks me that home builders pack multi family homes in such a way as to afford next to nothing for private outdoor gatherings. Despite this issue, we went ahead and look at local offerings.
Not all were condos, but the time spent traipsing through new builds gave us an opportunity to look at housing in a critical way we have not always done in the past. (Me, especially, since I fall in love with a lot of home upgrades.) We were/are settled into a home that works for our family and budget; we could window shop for windows and other housing amenities without feeling any pressure that housing options would dry up on us like they had in years prior when we competed with other buyers toting cash offers for resale homes when our housing budget was tighter and the supply of homes with a first time budget was even lower.
One of my favorite options was the Sapphire Plan condo from Lennar Homes at their Echelon at Treviso community. The 4 bed/3 bath condo built in Chandler, Arizona is in a cute community, but the $478,990 cost for a condo that lacks a yard immediately put it out of consideration. We have two dogs and they require outdoor space for our convenience and piece of mind that requires little to no supervision and both dogs could easily jump over the low walls separating each unit’s patio from each other. In spite of the lack of yard space, I think the builder did a great job in providing driveways; I do not recall if all units had a full size driveway but it is rather typical here for builders to short change condo owners on a driveway and instead utilize community parking for their needs. It makes having guests over a bit of a challenge as we found when we lived in a small home that was built along those same lines of forgoing driveways to pack in more houses.
Something like this could have worked, but it is important to do a cost benefit analysis.
Our situation would look like this:
$524,000 home sale
-$31,440 (to provide a 6% real estate commision)
-remaining home loan
-$4,000 (moving costs, full pack and moving services, roughly)
“True” Home Profit
Using a new build home provides a sort of “best estimate” of reduced moving costs by looking into a home with all the things we generally want. This condo community includes the fridge, gas oven, dishwasher, and microwave. Standard as well are quartz and granite countertops. A new build comes with PEX plumbing and a tankless water heater, options we would not have with some older resale home options. Still, we have dogs, and carpet with animals can get pretty gross. To be as comfortable as we are based on our current home, we would lose some of the remaining home profits to upgrade the floors in a new build so as to avoid carpets all together.
And this was our “best case scenario” based on some reduction in square footage and a reduction in outdoor space in order to find an “affordable” new build. We would still have to acquire a new mortgage, but something like the $478k new build condo is more appealing than what we’re seeing for similarly sized new build homes. Right now, Lennar’s Belrose community in Gilbert has a sub 2,000 sq. ft home listed for $529,990 and one of the cheapest models in their Chandler community, Asher Pointe, is $581,990. Neither option would allow us to capitalize on the fact our home’s value has increased based on increased housing demand over the pandemic. (There are other home builders currently producing similar homes, but I wanted to still with the Lennar brand for comparison purposes.)
If we wanted to revert back to looking at resale homes, a sub $500,000 home presents some interesting offerings. There is a home located at 242 S. Dobson Rd. in Chandler, built in 1975. It is a 3 bedroom, one bath residence with a carport that was listed back in late February for $430,000 and the Zillow price is now $424,000. The 7,361 sq. foot lot is really its selling point. The home could be torn down to the studs by a buyer with the right budget and a real amazing home crafted in its place.
A quick peek at Zillow for a Gilbert, AZ search for a sub $500,000 residence only produces 23 agent listings and 9 other listings as of today. Eight of the latter properties are in the foreclosure process. One condo is in The Gardens neighborhood, shown below.
Here is the unit we once considered for our first home that is located in The Gardens:
Looking at a similarly priced home to the current The Gardens condo for sale at $410,000, Gilbert also has this home on the market. This one is a bit older than the condo, but the 1998 home instead has a lot size over 6,000 feet for just $15,000 more than the condo. These are the kinds of comparisons confronting us as we went back and forth on whether or not to sell our current home because the sizable profit we could have made was tempting.
What is not tempting is looking at the involved risks that outweigh the benefits. It is hard to gauge how well maintained homes are by just looking at what’s produced by a home inspection. There are things you can find out down the road and items do just reach the end of their lifespans. Roofs need repairing, pools require resurfacing, A/C units fail, and water heaters will eventually need replacement. The ages of properties most in line with our desired budget are coming up on their replacement/repair windows for various large ticket items like a roof or the A/C. If we ever looked at a condo or other multi family housing situations more seriously, I also have the Surfside condo collapse last year that killed 98 persons informing my decision making process. I think I would need a lot more information about the building’s maintenance history before purchasing anything in a high rise building.
As we settle into the place we now intend to call home for awhile, I am interested in what improvements make sense from an aesthetic and financial standpoint. Interior home improvements do not garner a lot of the same return on investment as outdoor improvements. We can protect our earned equity by being mindful in our choices and doing the work ourselves when it makes sense. Things like electric improvements, such as the canned lighting we want to put into the living room one day, will be the job for an electrician. These photos are a little peek at what we’ve currently done to bring extra functionality into our combined living room/dining area without breaking the bank.