Why is one area of a pretentious zip code so much cheaper than the others?
August 1, 2011 1:11 PM Subscribe
Very long post regarding a first-time home buying quandary, and yes, I've read the other recent threads. My immediate questions (meaning I know I'll have more as this process progresses) are quite specific and as a result haven't yet been addressed here. Mainly, if the Birmingham/Bloomfield area of metro Detroit is supposedly synonymous, why are houses in West Bloomfield so much cheaper than those in Birmingham? What am I missing? And in my particular situation (age, childlessness, etc) is there truly an advantage to buying versus renting?
Mr. Adams and I have lived in Birmingham, MI, since 1999. I love it here. We rent a house that is approx 1400 sq ft, three bedrooms, 1 1/2 baths, two decks (one outside the upstairs master bedroom). Our landlord (who moved to Arizona a few years ago) now wants to sell the house and is pressuring us to buy it. (She'd had it on the market with no bites for a little over a year before she listed it as a rental, that's when we moved in.) She's asking $210,000 for it, which seems excessive in this market. There are similar houses all around us that have been sitting vacant with "For Sale" signs in front of them for years. She's not really willing to negotiate, and if we do ultimately move out of this house Mr. Adams wants to buy rather than rent "so we don't have to go through this again."
I really love Birmingham, but actually buying a house here is so expensive. (Whereas we could find another similar rental property in the area comparable to what we're paying now - a little over $1000/month. Plus utilities.) So I expanded my search out to Bloomfield Hills, Beverly Hills and West Bloomfield. (Save your snide cracks about the pretentiousness of wanting to live in the B/B area; I've already heard it all from Mr. Adams and several of my friends. I'm also looking to the future, as I'll explain later.) Anyway, I've found some nice houses in our price range in West Bloomfield, but I'm wondering exacly why there happen to be so many affordable houses in this area, especially when so many of them are located on large plots of land versus the tiny lots in B'ham? I've always heard "you're paying for the land, not the structure." Here's an example: this house is in our current zip code - less than 1,000 sq. feet, tiny lot, only one bathroom and still $140,000. For the same money, we could get this house in W.Bloom, which is situated on a much larger lot and has an extra half bath, not to mention the other amenities. Why such a huge price differential in two (presumably) similar demographic areas?
Mr. Adams and I are both over 40 years old and have no children, so proximity to schools is of no concern; we both work from home so we're looking for internal accoutrements rather than external. With this in mind, it seems to me that renting a house similar to our current one makes more sense than making a major purchase like a house just so that we won't get ousted again, or so that "you can decorate it any way you want to" (some of my friends' constant refrain in favor of buying). And I feel that the housing market in metro Detroit is far less stable than other major cities; that is, when people say "you're making an investment" or "you're building equity", that doesn't always hold true. My parents bought their house in south Warren (three blocks north of Eight Mile Road) in 1958 and have made many upgrades over the years. Seven years ago it was appraised in the neighborhood of $80,000. Last year the appraisal was a little over $20,000, and from the real estate listings I see online for that zip code, no home is being offered for more than $30,000, despite the size and available amenitities. My Mom is basically "stuck" there, as she'll never recoup what she and my Dad put into that house over the years if she sells, so where is the "investment"? The "equity"? That's part of why I'm looking to stay in Birmingham/Bloomfield; from what I've seen in my research, those homes have maintained much of their value over the years, versus neighboring suburbs like Royal Oak, Troy, Ferndale, etc.... Except for those W. Bloom houses....why are they consistently selling for less??
The tl;dr summary: What makes houses in West Bloomfield that much cheaper than Birmingham/Bloomfield Hills/Beverly Hills? And if you're looking to stay the same or go bigger (dwelling-wise), what are the benefits of buying versus renting for an older childless couple at this stage in their lives?
Mr. Adams and I have lived in Birmingham, MI, since 1999. I love it here. We rent a house that is approx 1400 sq ft, three bedrooms, 1 1/2 baths, two decks (one outside the upstairs master bedroom). Our landlord (who moved to Arizona a few years ago) now wants to sell the house and is pressuring us to buy it. (She'd had it on the market with no bites for a little over a year before she listed it as a rental, that's when we moved in.) She's asking $210,000 for it, which seems excessive in this market. There are similar houses all around us that have been sitting vacant with "For Sale" signs in front of them for years. She's not really willing to negotiate, and if we do ultimately move out of this house Mr. Adams wants to buy rather than rent "so we don't have to go through this again."
I really love Birmingham, but actually buying a house here is so expensive. (Whereas we could find another similar rental property in the area comparable to what we're paying now - a little over $1000/month. Plus utilities.) So I expanded my search out to Bloomfield Hills, Beverly Hills and West Bloomfield. (Save your snide cracks about the pretentiousness of wanting to live in the B/B area; I've already heard it all from Mr. Adams and several of my friends. I'm also looking to the future, as I'll explain later.) Anyway, I've found some nice houses in our price range in West Bloomfield, but I'm wondering exacly why there happen to be so many affordable houses in this area, especially when so many of them are located on large plots of land versus the tiny lots in B'ham? I've always heard "you're paying for the land, not the structure." Here's an example: this house is in our current zip code - less than 1,000 sq. feet, tiny lot, only one bathroom and still $140,000. For the same money, we could get this house in W.Bloom, which is situated on a much larger lot and has an extra half bath, not to mention the other amenities. Why such a huge price differential in two (presumably) similar demographic areas?
Mr. Adams and I are both over 40 years old and have no children, so proximity to schools is of no concern; we both work from home so we're looking for internal accoutrements rather than external. With this in mind, it seems to me that renting a house similar to our current one makes more sense than making a major purchase like a house just so that we won't get ousted again, or so that "you can decorate it any way you want to" (some of my friends' constant refrain in favor of buying). And I feel that the housing market in metro Detroit is far less stable than other major cities; that is, when people say "you're making an investment" or "you're building equity", that doesn't always hold true. My parents bought their house in south Warren (three blocks north of Eight Mile Road) in 1958 and have made many upgrades over the years. Seven years ago it was appraised in the neighborhood of $80,000. Last year the appraisal was a little over $20,000, and from the real estate listings I see online for that zip code, no home is being offered for more than $30,000, despite the size and available amenitities. My Mom is basically "stuck" there, as she'll never recoup what she and my Dad put into that house over the years if she sells, so where is the "investment"? The "equity"? That's part of why I'm looking to stay in Birmingham/Bloomfield; from what I've seen in my research, those homes have maintained much of their value over the years, versus neighboring suburbs like Royal Oak, Troy, Ferndale, etc.... Except for those W. Bloom houses....why are they consistently selling for less??
The tl;dr summary: What makes houses in West Bloomfield that much cheaper than Birmingham/Bloomfield Hills/Beverly Hills? And if you're looking to stay the same or go bigger (dwelling-wise), what are the benefits of buying versus renting for an older childless couple at this stage in their lives?
And if you're looking to stay the same or go bigger (dwelling-wise), what are the benefits of buying versus renting for an older childless couple at this stage in their lives?
My boyfriend and I decided to buy (and just did) for these reasons:
-- we were tired of having to call the management company to report issues and waiting for them to call the owner to authorize how much to spend on repairs and then fix or not fix it as the case may be. (i.e., never replacing the mesh on the eaves that the squirrels chewed through to get into the attic with something squirrel-proof, which led to continual squirrel infestations)
-- we wanted to settle down in one place and not move for a long, long time
-- while we don't expect to make a great deal of money on the house in the future, we'll get at least *something* back if we sell it, even at a loss, rather than just renting, in which case we'd get nothing back.
-- we enjoyed living in a house, rather than an apartment, and we wanted a newer build in a neighborhood that I could walk around in by myself without getting nervous, and the rental market here just wasn't supplying the right sort of thing.
I have to admit, getting our respective parents to shut up about "It's a great time to buy!" and "You should buy instead of rent!" was maybe a wee itty bit of it, but the squirrels and roaches that the management company wasn't moving quickly to get rid of was a much greater part of it. We're now responsible for all the maintenance ourselves, but this way we can at least find good service places ourselves and make sure the repair/maintenance is done properly the first time.
posted by telophase at 1:45 PM on August 1, 2011 [1 favorite]
My boyfriend and I decided to buy (and just did) for these reasons:
-- we were tired of having to call the management company to report issues and waiting for them to call the owner to authorize how much to spend on repairs and then fix or not fix it as the case may be. (i.e., never replacing the mesh on the eaves that the squirrels chewed through to get into the attic with something squirrel-proof, which led to continual squirrel infestations)
-- we wanted to settle down in one place and not move for a long, long time
-- while we don't expect to make a great deal of money on the house in the future, we'll get at least *something* back if we sell it, even at a loss, rather than just renting, in which case we'd get nothing back.
-- we enjoyed living in a house, rather than an apartment, and we wanted a newer build in a neighborhood that I could walk around in by myself without getting nervous, and the rental market here just wasn't supplying the right sort of thing.
I have to admit, getting our respective parents to shut up about "It's a great time to buy!" and "You should buy instead of rent!" was maybe a wee itty bit of it, but the squirrels and roaches that the management company wasn't moving quickly to get rid of was a much greater part of it. We're now responsible for all the maintenance ourselves, but this way we can at least find good service places ourselves and make sure the repair/maintenance is done properly the first time.
posted by telophase at 1:45 PM on August 1, 2011 [1 favorite]
I can't speak to the particular areas you're looking at, but here's a thought about buying vs renting. How strongly do you two actually feel about "being able to decorate it however you want"? Because if neither of you is especially handy or house-renovation oriented, buying a house comes with a whole lot of maintenance headaches that you can avoid by renting. (Supposing that you can find a responsive landlord.)
Do you like the freedom of not having to clear the gutters, pay for the plumber, etc?
Do you like the freedom of knowing you could move if you needed to (for example if you suddenly needed lower fixed monthly costs, or if you had a family/job/health situation requiring a move, or if the neighborhood went downhill)?
If you like the renting lifestyle, I think you should be honest with yourselves about that. There is a lot of homebuying boosterism in the US and it's easy to feel like you "have" to buy a house to reach some imaginary level of adult independence or something. But buying a house, especially as you observe in an economically depressed area of the country, is not always a great idea for everyone.
posted by LobsterMitten at 1:50 PM on August 1, 2011
Do you like the freedom of not having to clear the gutters, pay for the plumber, etc?
Do you like the freedom of knowing you could move if you needed to (for example if you suddenly needed lower fixed monthly costs, or if you had a family/job/health situation requiring a move, or if the neighborhood went downhill)?
If you like the renting lifestyle, I think you should be honest with yourselves about that. There is a lot of homebuying boosterism in the US and it's easy to feel like you "have" to buy a house to reach some imaginary level of adult independence or something. But buying a house, especially as you observe in an economically depressed area of the country, is not always a great idea for everyone.
posted by LobsterMitten at 1:50 PM on August 1, 2011
Also, about "we would get money back when we sell it": if you have a chunk of money that you would use for a downpayment on a house, you can invest that money in other investments. Depending on the housing market you might well do better (just investment/moneywise) over say 5 or 10 years if you put the downpayment money into something else. So buying a house is not guaranteed to be a better move than renting, purely from the investment/money angle.
posted by LobsterMitten at 1:54 PM on August 1, 2011
posted by LobsterMitten at 1:54 PM on August 1, 2011
I think you're trying to be logical about something that, despite involving THOUSANDS OF DOLLARS, is not terribly logical. (Not at all a criticism of you, but just realize you're entering a kind of market that is just nutty. Especially now.)
As others have said, I would probably look at the ratings of school districts and particular schools to explain a big portion of that price difference. It's worth paying attention to, even if you don't have children, since that can be a good indicator of how properties may hold their value.
If your rent house seems like it's priced high, your landlord may be counting on you all not wanting the hassle of moving. Do you have a buyer's agent? I would get one -- they can help a lot. Even if you decide not to buy right now, a good buyers agent will sit down and chat without a fee. A good agent who knows that area can tell you what you need to know in a few minutes (vs. hours of poking around on the interwebz).
posted by pantarei70 at 2:01 PM on August 1, 2011
As others have said, I would probably look at the ratings of school districts and particular schools to explain a big portion of that price difference. It's worth paying attention to, even if you don't have children, since that can be a good indicator of how properties may hold their value.
If your rent house seems like it's priced high, your landlord may be counting on you all not wanting the hassle of moving. Do you have a buyer's agent? I would get one -- they can help a lot. Even if you decide not to buy right now, a good buyers agent will sit down and chat without a fee. A good agent who knows that area can tell you what you need to know in a few minutes (vs. hours of poking around on the interwebz).
posted by pantarei70 at 2:01 PM on August 1, 2011
Yeah, a lot of this has to do with schools, and prestige, and name dropping. Also, there are differences in demographics: median income for a family in west bloomfield is over $200,000. West bloomfield township, it's around $130,000. And, part of it is supply and demand - the township is much bigger, which means there are more houses. I suspect further digging would reveal a historic difference in racial and/or religious make up as well.
It's like the difference between the Grosse Pointes - if you don't live there, you probably don't see a whole lot of difference. But I was once told that when people move there, it's best to get a real estate agent familiar with the area so they can help "place you" in the right neighborhood. I don't think that was meant to be insulting, or that it had to do with race or religion (possibly with income, I guess). It's just that there's a difference to the people who live there, even within particular cities. I don't think bloomfield/westbloomfield/birmingham is quite as bad, but I'm out of the loop.
I'd say, find the individual neighborhood you like (want a quiet one? one filled with kids even though you don't have any? one walkable to something particular?) and go with that. Agree with the poster above who says real estate isn't very rational.
posted by dpx.mfx at 2:11 PM on August 1, 2011
It's like the difference between the Grosse Pointes - if you don't live there, you probably don't see a whole lot of difference. But I was once told that when people move there, it's best to get a real estate agent familiar with the area so they can help "place you" in the right neighborhood. I don't think that was meant to be insulting, or that it had to do with race or religion (possibly with income, I guess). It's just that there's a difference to the people who live there, even within particular cities. I don't think bloomfield/westbloomfield/birmingham is quite as bad, but I'm out of the loop.
I'd say, find the individual neighborhood you like (want a quiet one? one filled with kids even though you don't have any? one walkable to something particular?) and go with that. Agree with the poster above who says real estate isn't very rational.
posted by dpx.mfx at 2:11 PM on August 1, 2011
Having lived in this area for 40 years myself, having worked in Birmingham, having considered living in West Bloomfield, I think it all comes down to "cachet." Birmingham has a certain cachet that West Bloomfield -- and even Bloomfield and BH -- lacks. It's kind of a faux urban place for the rich to live. Or maybe it's because Elmore Leonard lives there?
posted by pardonyou? at 2:54 PM on August 1, 2011
posted by pardonyou? at 2:54 PM on August 1, 2011
Response by poster: Thanks for all the advice thus far. If the main price differential is due to the proximity to "good" schools, then that's no prob, as we don't have kids and have no plans on acquiring any. Neighborhood-wise, we currently live near an elementary school with a large playing field attached (which, during the warm months means not only screaming kids on the playground but also adult softball and lacrosse leagues in the evenings) and would probably prefer to live in a more child-free area. We really don't require anything "walkable" but would prefer not to live so far out in the sticks that there are no pizza/food deliveries available (and again, very good 911 response and proximity to a hospital takes priority "just in case", as we both have health issues).
We used to live in East English Village in Detroit, right on the Grosse Pointe border, so we're well aware of the difference between, say, Grosse Pointe Farms and Grosse Pointe Shores. And it's hard to state this without sounding like a complete racist and douchebag, but I really don't want to sink $150,000 or more into a house solely in the name of "diversity" when said neighborhood homes stand to lose a huge chunk of their value in the next 10 years. Call me racist or elitist, but it's a fact of real estate life in metro Detroit and it's our money and so-called investment. Again, I look at Mom's house and what she and Dad thought was an "investment" back in the day.....if we do buy a house (and it seems to be Mr. Adams' preference, and since I love him with all my heart and soul I will ultimately defer to his desire) I want it to be our fairly permanent residence. That is, it's not an interim place where we'll sell five or 10 years down the road and move elsewehere; this is presumably the place where we'll grow old together. Decor-wise Mr. Adams' main complaint about renting is that we have lots (and I do mean lots) of kitschy collectibles - it's our shared passion. He resents having to store most of our neon signs and lava lamps and such in the basement because we can't add shelves or put nails in the wall of a rental home to display all our treasures.
posted by Oriole Adams at 3:04 PM on August 1, 2011
We used to live in East English Village in Detroit, right on the Grosse Pointe border, so we're well aware of the difference between, say, Grosse Pointe Farms and Grosse Pointe Shores. And it's hard to state this without sounding like a complete racist and douchebag, but I really don't want to sink $150,000 or more into a house solely in the name of "diversity" when said neighborhood homes stand to lose a huge chunk of their value in the next 10 years. Call me racist or elitist, but it's a fact of real estate life in metro Detroit and it's our money and so-called investment. Again, I look at Mom's house and what she and Dad thought was an "investment" back in the day.....if we do buy a house (and it seems to be Mr. Adams' preference, and since I love him with all my heart and soul I will ultimately defer to his desire) I want it to be our fairly permanent residence. That is, it's not an interim place where we'll sell five or 10 years down the road and move elsewehere; this is presumably the place where we'll grow old together. Decor-wise Mr. Adams' main complaint about renting is that we have lots (and I do mean lots) of kitschy collectibles - it's our shared passion. He resents having to store most of our neon signs and lava lamps and such in the basement because we can't add shelves or put nails in the wall of a rental home to display all our treasures.
posted by Oriole Adams at 3:04 PM on August 1, 2011
One advantage to owning a house is that your rent will keep going up but your house payment will stay the same. You also get to stay in your house - if you live in a rental they do not have to renew your lease and you'll have to find somewhere else to live.
posted by Melsky at 3:58 PM on August 1, 2011
posted by Melsky at 3:58 PM on August 1, 2011
The deal with schools is that even if you don't have kids, it's something that will help your resale value later. However if you are going to stay there until you need a nursing home it might be less of a consideration.
posted by titanium_geek at 5:01 PM on August 1, 2011 [1 favorite]
posted by titanium_geek at 5:01 PM on August 1, 2011 [1 favorite]
Sorry for a double post!
If this is the first and last home you will ever buy, make sure it is old people friendly- not big steps, nice wide doors for walkers/frames, not slippery surfaces, not too steep yard, driveway etc.
I'm not sure how it works in the USA, but if/when you need to move into a care home, you may/will have to sell the home (especially if there is just one of you left) to finance that.
posted by titanium_geek at 5:12 PM on August 1, 2011 [1 favorite]
If this is the first and last home you will ever buy, make sure it is old people friendly- not big steps, nice wide doors for walkers/frames, not slippery surfaces, not too steep yard, driveway etc.
I'm not sure how it works in the USA, but if/when you need to move into a care home, you may/will have to sell the home (especially if there is just one of you left) to finance that.
posted by titanium_geek at 5:12 PM on August 1, 2011 [1 favorite]
I just bought a house. My favorite part: I moved in with cardboard boxes, but I'll be moving out in a pine box.
There are a zillion other reasons I'm glad I bought this house, but the catharsis of getting rid of every single cardboard box -- and I mean every single one -- was the absolute best. YMMV.
posted by Capri at 8:51 PM on August 1, 2011
There are a zillion other reasons I'm glad I bought this house, but the catharsis of getting rid of every single cardboard box -- and I mean every single one -- was the absolute best. YMMV.
posted by Capri at 8:51 PM on August 1, 2011
If you think you are going to stay for a long, long time, I'd go ahead and buy. I'm from SE Michigan (Waterford, specifically) and have watched my parents' home plummet in value over the last 10 years. I just can't imagine home prices getting any lower in the area than they are right now, and interest rates are super low.
If there's even a 20% chance you'll want to move (and do it in a hurry), I wouldn't buy. Mr. Getawaysticks and I have a home (In Dallas, though, but in a "diverse neighborhood") that we are stuck in for the foreseeable future because we refuse to take a loss on it.
posted by getawaysticks at 6:25 AM on August 2, 2011
If there's even a 20% chance you'll want to move (and do it in a hurry), I wouldn't buy. Mr. Getawaysticks and I have a home (In Dallas, though, but in a "diverse neighborhood") that we are stuck in for the foreseeable future because we refuse to take a loss on it.
posted by getawaysticks at 6:25 AM on August 2, 2011
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Different how, exactly? I know B'ham has a great downtown and free concerts in the park and art fairs and all that, but to be honest, in all the years we've lived here we've very rarely taken advantage of any of that. I'm more concerned with things like how is the 911 service in WB versus B'ham? Is there regular garbage pick-up (including branches, bulk items) like we have here? And will homes in WB maintain their value unlike those in Oak Park and Southfield?
posted by Oriole Adams at 1:37 PM on August 1, 2011