Housing market is ripe for ‘fixer-uppers’
Fix-up buyers are largely rare birds in a market with a huge supply of houses for sale and a continuing shortage of takers — tax credit notwithstanding.
By Alan J. Heave
The Philadelphia Inquirer
PHILADELPHIA — If you look at the trends among homebuyers in the Philadelphia market, the Dolans appear to be a bit out of step:
Daniel Dolan, a chemical engineer, and wife Shaliz, an ob-gyn physician at Temple University Hospital, have just remodeled the kitchen in the town house they bought in July.
Instead of the “perfection” real-estate experts say today’s buyers crave, the Dolans chose a house that needed work — a “fixer-upper,” for want of a better description.
“It let us buy more house,” Daniel Dolan said, and, just as important, “lets us put our personal stamp on it.”
Fix-up buyers are largely rare birds in a market with a huge supply of houses for sale and a continuing shortage of takers — tax credit notwithstanding.
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But for the most part, observers say, house hunters know a buyer’s market when they see one and want perfection without working for it.
Ruth Feldman, of Weichert Realtors’ Mount Airy, Pa., office, described what the Dolans bought as an “in-between,” a four-story town house that had been for sale for seven months.
About $445,000, “it is priced $100,000 below the very same style house next door, which sold in June for $549,000,” Feldman said. Yet “every buyer who looks at it (and we’ve had lots of showings) says it’s priced too high and needs too much work.”
These days, she said, buyers “want the totally redone, tasteful décor, granite-and-stainless-steel kitchens and fancy tile baths — which are everywhere, even in much-lower-priced rehabs. These buyers all watch too much HGTV.”
Patrick Campbell has an unusual perspective because he sells real estate and, in the late summer, chose to buy a fixer-upper as his primary residence.
The house was owned by Penn professors who had rented it out for 30 years, he said.
What sold him was the house’s location and price, said Campbell, who paid $370,000 — $20,000 over list price — to outmaneuver two other prospective buyers. He considered the block, especially its proximity to Rittenhouse Square, “perfect.”
But the house was “falling apart,” he said. The ensuing months have been spent tearing out drywall to create an open floor plan; refinishing the hardwood floors; redoing both bathrooms, the kitchen and the basement; and upgrading the electrical work.
Because of the tax credits for qualified first-time and move-up buyers, the market’s sweet spot remains $350,000 and below, while $850,000 houses just aren’t selling.
Campbell learned his lesson as an investor in Northern Liberties, where he and a business partner did a project and lost money on it.
“Real estate remains about location and price,” he said.
The Dolans relocated to Philadelphia more than 18 months ago from the Worcester, Mass., area, and rented until they sold their rancher in April.
“We’d gone through the whole experience [of renovating],” said Daniel Dolan, adding that proceeds from the rancher’s sale didn’t match prices in the new neighborhood.
They looked at 20 properties before finding their $442,100 town house.
“It was a location issue, primarily,” he said. “We also weren’t looking to gut a place. This house not only had good bones; it was one we could move in first, upgrade later.”
The first floor had been broken into four rooms. With a contractor’s help, the Dolans took down all the non-load-bearing walls and created an open plan with kitchen and great room.
“We think it looks fantastic,” said Daniel Dolan, who has set his sights on redoing the master bath — at some point
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