Hello from the Corner Office-
Once again, I am looking for the least expensive entry level home that can be purchased anywhere in Nevada County. Today I went to a see a one bedroom and one bath room home in Penn Valley that has the look and feel of an apartment but is actually a house, a very small house. The size explains the price, listed for just $172,000, less than 25 years old and decent condition, but with a floor plan that so resembles a apartment it is hard to imagine the profile of the buyer who would want this sort of home who would not be better off financially simply renting an apartment? It’s bank owned, which means it may drop in price substantially before it gets sold.
So, why even both look at homes like this?
The inventory of homes under $200,000 will never be more than four of five at any given time. There will never be enough of them to find genuine comparable sales. Only by looking at every home that gets listed in this price range, and seeing the entire range of fixers, small homes, manufactured homes, and homes where all the value is in the land, does one start to get a rounded picture of the very lowest end of the market. Whether you are thinking of buying an inexpensive home to get a foothold in the home purchase market, you want to downsize, or you are an investor looking to flip or purchase a rental, knowing what the least expensive homes are sold for creates a baseline in valuation for the entire market place.
It is also helpful to watch fluctuations in the lowest price of homes, as prices ripple up and down the price point for the entire market, and when the lowest price homes rise in value, you can watch how those price increases move on up the price point indicator for more expensive homes. And finally, of course, every once in a while a outlier home will be listed down in this price range where the home is actually much nicer and has much more fair market value than the seller is asking. If you are an investor, and you’ve looked at everything for under $200,000 for five or six months, seen all the fixers and junk, and suddenly something that has three bedroom and two bathrooms comes on the market for $199,000… Is it a great deal? There will not be any comparable homes to measure against. The only way to know will be through the direct experience you have with the inventory of other homed in that price range and seeing what has sold for what price over the last couple of months.