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It’s time to rewatch the 1986 Tom Hanks/Shelley Long cautionary tale about their dream house gone wrong.
After spending last year’s home improvement efforts on my newly-acquired tin can casita, my used car of a fishing cabin in the Sonoran Desert, I’m back in the city for some long-pondered home renovation. It ain’t been pretty, at least when I review the hit to my portfolio. Everything from a piece of lumber to a square foot of cement is more expensive than I’d imagined. Plus, it’s all taken much longer than expected, and the planned summertime work will stretch into late fall. The primary goal here is to improve the property so it’s in good condition for my older years, should I stay in it rather than move elsewhere. The secondary goal is to increase its appeal to younger homebuyers, should I downsize or leave it behind altogether.
I’m also listening to long podcast discussions on “rent v. buy”. I’m renting the spot where my retirement experiment, my owned park unit sits (it came to rest there 40 years ago, been through many owners before me) so I’m actually on both sides of the discussion for the first time in decades.
The thing is, as is the case for many other homeowners, the house I’ve lived in for over 30 years has become a sizable element in my portfolio. A 401k only requires an occasional rebalance, a small pension is completely on autopilot. But like most homes, mine benefits from ongoing maintenance and occasional improvement.
Instead of selling the big house and living full-time in my remote 370-square-foot unit, I may downsize into a smaller house nearby. At least for a few years, I’d like to retain regular contact with my kids, old friends and neighbors, enjoy city life on occasion, cook with the finest fresh foods in the country, eat at my favorite restaurants, and take breaks from savage climate and rattlesnakes. One or another of my kids has been sharing the house with me the last few years, which means I have someone to tend to it when I’m in my bliss at the edge of the universe.
But smaller homes on the market here are almost as expensive as what I’d list my “big house” for. The less expensive ones are in very worn condition, as this is a century-old neighborhood, or at the more dodgy ends of the neighborhood, not especially safe for an older person on their own.
So that leaves me to work on my current house, and if I find a nicer smaller place, I can sell it. To the next starry eyed couple looking for their “forever home”.
No one goes shopping for a money pit, right?
We waited too long to sell our home of 40 years because I was reluctant to give up the house and face the work and stress of moving. Big mistake.
But it worked out. We sold the house (built in 1929) and bought a 2,000 sf condo in a 55+ community 7/10 of a mile from the house. The sale paid for the condo. We haven’t saved much if anything on home living expenses, but are relieved of maintenance work and worry.
Since moving in 2018 our condo investment has grown from $580,000 to about $900.000 in value. But the move was not about money, rather no stairs, no worries about outside maintenance or major repairs or a damp basement, etc.
We all, I am sure, you see the homeless beggars with their cardboard signs on busy street corners. While they don’t have a place to live, they avoid the hassle of owning stuff. Whether your property is a “candominium”, or singlewide, or condo, RV, van, or home, all create a burden that takes both time and $$ to continue to be livable. Just like a PC, smart phone or tablet, you must keep updating the operating system and apps to get the value. I call this additional investment of time/cost, the “Futz Factor”.
So far this year, our primary residence has needed a new refrigerator, washer, 2 new garage door openers, and I am about to order 9 new window blinds to replace 40+ year old versions. Additionally, I have replaced 3 46 year-old toilets. Every year, I have such a list. It is easy to brag about what a great investment this house has been with its taxable value increasing 11X over our 46 year ownership. When you factor in the cost of the Futz Factor it ain’t so wonderful…..
Early next month I will be headed your way to my other home in Oro Valley. The purpose of this visit is to clear the place out so that it can be sold. After 12 years of coming down for a five month Winter stay, we can’t continue to go. I have to check my spouse into a Memory Care Respite facility so that I can make the trip to Tucson for two weeks.
Our house in OV has appreciated but who can predict how we will do with the sale. I have two weeks to get the job done and arrange for it to go on the market.
Two weeks in a respite facility is going to cost around $5k…..But the fact that such care is available is pretty wonderful. Later on, I may author an article on my travails of the last couple of years…
Making an annual list in January and reviewing what got done (and why) in December is an helpful in assessing the cost and personal value of owning any major item. Culling excess from my life is part (not my favorite part) of retirement. But once something is gone, I no longer need to tend to it. (Anything replaced almost immediately starts its own cycle of decay, a cautionary warning for adding back in.)
One thing about an over-55 community… I’m constantly reminded that “now” is a good time to get things done. One neighbor sold their unit last spring for the same reason you are selling. I’m wishing you and your spouse “the best” of a difficult situation and time.
Oro Valley, indeed most of the south of Arizona, is beautiful country. When I’m away from the desert (like I am now, tending the old house) I hold fond images and memories close. And am grateful for them.
Yes, it does take time and $$$ to keep a residence in a livable condition. Some people simply don’t have the funds, or prefer to spend their money elsewhere. In our resort we have more than a few handymen who do everything from change light bulbs to roof repairs and install patios. They trim trees and do landscaping, too. Some are more skillful than others. I have a long list of cautionary tales.
The challenge is doing it properly. There is a tendency to avoid required permitting. That can result in unsafe or questionable practices.
When considering a purchase it is prudent to hire professional inspectors to look for problems. That’s an optional step that some consider unnecessary.
When we sold our 3-BR condo in 2022 the inspector couldn’t find a single problem. That wasn’t an accident. I’d made it a point to properly maintain everything and to do periodic upgrades. Over a 20 year period I probably spent more than was absolutely necessary, but I did avoid breakdowns. On the other hand, because I did a lot of the work I reduced my costs substantially. For example, upgrading the master bath cost $1,400. New cabinets, floor, refurbished tile, new faucets, epoxied tub, etc.
And I did get permits and used professionals for any gas and serious electrical work. That’s a legal requirement.
Realtors in that area routinely ask for copies of permits as evidence that the work has been done legally and properly. Here in AZ permitting seems to be an option.
The resort has a wood shop and that is conducive to certain types of projects.
Yes, the base prices for “smaller” homes have been increasing. I was once interested in “tiny homes” and realized they were overpriced. Older “candominiums” as some call park models, are available at what might term a reasonable price. Most however in the lower price range require repairs or improvements. They weren’t designed for a 50-year useful life. To keep them livable often requires extensive overhauls. One neighbor decided to do the necessary work and discovered the total cost would be as much as a new unit.
One of the neighbors purchased an older park model as a “winter” home and then discovered that a series of repairs were needed. The cost of repairs exceeded the original purchase price. However, he decided to amortize the cost and stated they would probably use it until physically unable. He was able to shrug it off.
I live in a “resort” community which according to HUD rules is for those aged 50+. It has park models, manufactured homes, condominiums and RV sites. Quite a range and something priced for everyone. At the lower end, it is expected that repairs will be necessary. We looked at park models in 2015 but decided that a new 41 ft. RV with 5-slides on a covered site was a better choice. We lived in it 4-6 months of the year, travelling and living elsewhere during the remainder. After 10-years we sold it and that improved site. The cost to own it and the site improvements were less than $2,000 per year, or about $170 per month.
We then purchased and moved into a large manufactured home in that same resort.
The home had been built in the 1990s but the previous owner was big on decorating, but delayed maintenance until absolutely necessary. So, we got stone countertops, antique silver paint, LED lights above the kitchen cabinets, etc. We knew what we were buying, and quickly spent more than $35,000 fixing problems we identified prior to purchase.
I sympathize with the young because today’s prices make home purchase more difficult than when I purchased my first in 1978. However, at the time I was debt free. Too many take on college debt and mortgage their future. College has lost its cache, which at today’s prices is not an altogether bad thing. However, coupled with the very poor standards of many public schools young people exit high school with an inadequate education. That’s a formula for failure.
With the exception of very new RVs and park units, everyone at my park lives with routine or exceptional maintenance/improvements on their units or lots. Because nearly all grew up in an era when public schools had shop classes, there’s plenty of knowledge to go around for DIY work, plus we exchange the names and contact info for service firms. I get good advice from other residents. I watch a lot of YouTube videos, too.
Many high schools no longer offer shop class. This is a disservice to young adults in my thinking, many who are unfamiliar with basic home maintenance, its tools and tasks. I think most kids would get greater value from a shop class than taking an extra AP course to up their chances of getting admitted to this or that college.
Though our park doesn’t have condominiums or full size mobile homes, several developments are nearby, literally across the boulevard and down the road, so former RVers or current park unit residents who want to own a place or have a more traditional home can easily remain friends with buddies from their roaming years.
Top of the line RVs cost hundreds of thousands of dollars. The least expensive old park unit sold in my park last year was something like $38k, and a few people live in park units they inherited from their parents. Some people live on social security while others have more than comfortable nest eggs. A few widows and widowers but most residents have partners. I like that our park has an active social club in winter, with activities run by the members of the community, everyone welcome. Not a perfect place but works for me for now.
Repairs/remodels are “expensive” but commensurate with the costs of the units for the most part. I might need to replace the roof of my shed this winter, but repairs at my big house include replacing my garage. Even if I bought a whole new shed, it would cost a fraction of the cost to build a new garage
I love the term “candominium”. Will start using it immediately.
Cathrine, I think the good news is that you control your destiny. At this point in your life, your housing choices can be made on your terms, as opposed to being forced into a decision due to poor health or money issues. Best of luck with your homes.
That was a great movie.
Thanks for your comment.
I enjoyed watching the movie back then, found it unbelievable. It’s an exaggeration of course, but in every instance when we’ve opened a wall for some unrelated work, we’ve discovered surprising, even shocking unknown problems that have to be addressed. An old house is a repository for those “unknown unknowns” along with the many “known knowns” one can find with a good inspection.
It is a huge relief to recognize that thanks to forty years of good saving habits and a bit of luck (had both good and bad), I can indeed decide what to do on my own terms, yes.
A big part of why I’m renovating today, I am sure a decade from now I’ll be much less able to manage these larger projects, and they’ll also be way more expensive. In a decade I’ll likely be less willing and able to spend on this scale, thanks to the inevitability of inflation and the difficulty of managing a fixed asset base to meet or exceed inflationary pressures. Home repair costs certainly grow faster than inflation, for as long as I’ve been paying for them.
Catherine – thanks for this. The old story of selling the current home and buying a smaller, less expensive home is – as far as I can tell – no longer true. Costs of repair may be substantial, but the cost of selling and buying, moving, fees, etc. potentially eats all the potential benefit of the sale.
I’ve seen this in the recent reading I’ve done. Even the idea of selling a family house in a high-cost region and retiring to a supposedly lower-cost state is no longer as dependable a strategy as once considered, though I’ve followed Kristine Hayes’s experience closely. She’s a planner so it seems to be turning out just fine.
Selling and buying homes certainly isn’t a cost-free endeavor, nor is moving. Better perhaps for me to empty the house to ease that task for the kids after I’m gone, taking to the desert what little fits my unit and that I want to keep at hand. My house will seem much more spacious with many things gone. There’s a financial benefit in staying put, and I see that with most of the oldsters in my neighborhood, where I think only one has moved to assisted living at the request of her adult children.
It’s a shame that downsizing is so expensive.
Great article, thank you.
From a personal finance perspective, there wll always be argument about buy / rent, the effectiveness of real estate as an investment etc.
But I think that it’s valuable to consider a different perspective. For many, their home becomes a real haven. The money spent on it is an investment, not financially, but in their happiness and wellbeing. I’m sure for many, having a home they are contented in is much more valuable then extensive travel, car upgrades. etc.
Thank you for your comment, and so true.
Much advice encourages spending on experiences not things. But the house we live in, especially if it’s long been the locus of our lives and special times, becomes a repository of memories, a thing that recalls and creates new experiences, especially in retirement when we are at home more.
You mention home as haven, great point. I invoke this with my kids whenever they come through the door talking about a difficult day at work. At home, we hope to find exactly that, protection from the outside, a place where people care about us, listen to our stories, (mostly) agree with us. Could be owned or rented, but home is a special place.
I was thinking yesterday that for the cost of a nicer car which I might have for 10 to 20 years, I am replacing a 94-year-old garage; the new one could easily last another century, unless a later homeowner decides to demolish it. (I’m trying to make it as generic as possible, a blank slate so to speak, to allow its future owners to see it as they wish.) Because of its longevity, the new garage’s investment value will mostly go to others, not me, thus making it a sub-optimal spending choice. But it was a bad garage when we moved here, and 34 years later, it’s a worse garage. It makes me feel good improving my house by replacing the garage.
Weird to think it will outlast me, even my kids. But then, I got use from the old garage that went through several other families before mine.
I know the feeling—it’s a difficult choice and one I’ve grappled with myself. I’ve actually written an article about it that I was going to post, although it’s from a different viewpoint.
Thanks for your many contributions, always interesting reading.
I also gain perspective from talking to oldsters in the desert. It’s got me thinking of retirement as a new dynamic age, not settling in for the long (or short) decline, but more to making the most of our days.
Also, I’ve been going to open houses, both to look for a better fit, and to gain of sense of the best small efforts to make this house easy to sell (of course, listing it for a low price is the easiest way.) Went to one yesterday, a house I would have loved 20 years ago with family space on the first floor, bedrooms upstairs. But now I’m glad I have the option to live 100% on the ground floor if necessary.
Your tin can casita. My wife Suzie and I owned something very similar when my daughters were young: a 40-foot by 15-foot park home. It was new and a marvel of small-space design with all the modern comforts of a house. In Ireland, they are now a very aspirational item as a family vacation base and can be very expensive; at the upper end of the market, you could purchase a small condo in need of love for the same price. We have very fond memories of our time there. To be honest, it’s a 50/50 call over which I prefer: my vacation home or our old park unit.
That’s approximately the same dimensions of the one I’ve got. And it works well for me. Lovely memories you have.
Decisions about life transitions are hard. “Should we hang on to the old, or should we grab on to the new?” (paraphrase of a song lyric you may have never heard.) I immediately thought of Dana Ferris and her posts about being drawn toward two–or more–communities. And I know there are many more families facing similar decisions. I think your plan is sound. Just hold steady and keep your eyes open until the next step is obvious.
Thanks for this good advice. And a trip down memory lane as I haven’t kept up with the Bellamy Brothers who kept going for another half century of music and touring, amazing.
Talking to other retirees about their lives continues to be helpful. We all must make adjustments, whether experiencing new opportunities and desires, or losses or health scares or family dilemmas or money questions. This is so very different than our working years.
We moved from an aging home to a new construction condo six years ago, but I’m now restlessly eyeing homes with a yard, mainly because I desperately want a dog. But the homes we might move to are old—in some cases, older than the one we sold six years ago—expensive, and in many cases, not updated (so an instant money pit after buying). It’s hard to talk myself into wanting to remodel a kitchen or bathrooms again when I look around at our beautiful, modern six-year-old condo, which also has great views and natural light. Probably the more sensible option is to suck it up and deal with having my dog in the condo. There is a dog park visible from our condo and a lovely walking loop. It certainly would be possible to give a dog a good life, especially with me being retired and having all the time I’d need to keep the dog happy and active.
Dana, my daughter and SIL have a home with a fenced backyard, which at first appeared to be the perfect situation for their dog. He, however, does not want to go out there without them. And when forced to, often terrorizes the baby rabbits that insist on entering the yard. Once in a while, he even catches one which then causes them some emotional upheaval.
I hear you. After 30+ years of occasional remodeling, this house is in pretty good order. But I don’t want to spend my retirement years updating another fixer-upper. Except of course, my tin can of a casita in the desert.
As for a dog’s life, whenever I’m in the desert I don’t have a fenced yard and even if I did, I wouldn’t let the dog out back alone, due to cacti and critters. In the hotter seasons walks have to be timed and placed so he won’t burn his feet. Yet, he has great fun there. Many neighbors have dogs. The dog walk directly behind my house, the dry wash, and the cut-de-sac I live on (the turnaround point for delivery trucks, casual bikers, walkers and dog walkers), each give him chances to spot and hang with other dogs. (Good social time for me too.) We also have a mini off-leash area (rock and fake grass) in the park. I also use a cage-free dog sitting business here and a dog sitter there for when I’m out and about, rather than leave him home alone indoors for long hours. They can take him overnights if/when I’m traveling.
Paying so much attention to the dog is something new, I’m sorry to say. In my working life, a dog was my spouse’s companion, not mine. So it’s another aspect of retirement, having this friend and helper. He’s good company, and lifts my mood, especially, if it should get too serious or heavy, and that’s something I’m grateful for.
Will the dog travel to your island retreat? We love our dog, but finding someone to tend to her when we take our short trips is an issue. And she’s not amenable to a boarding situation.
Edmund – we have the same issue. Our dog is leash aggressive and does not get along with other dogs. We must hire a house sitter whenever we travel.
I can relate. Our primary home is 100+. We’ve been sinking cash into the money pit for almost 50 years— the painter left on Thursday. He was preceded by the plumber who replaced the main waste pipe and the carpenter who then dealt with fixing the wall that had been opened. We soldier on resigned to the fact repairs will never end.
“Soldier on”. That’s a good motto for me! Thanks for posting.