Home & Garden Columns

About the House: Houses in Need of a Cold Compress

By Matt Cantor
Friday October 05, 2007

There’s a house in my neighborhood that’s back on the market again. You know the one. Been on and off the market for years and despite all reason, it’s listing for well over a million dollars. It has big problems: foundation, parking, odd use of space, geological issues and problematic drainage (let’s not even talk about the paint job), but there it is, asking more money than the last time and you know what? They’ll probably do all right. 

That’s the weird and funny thing about this market and our locale. It’s so coveted, that even allowing for the wild-boar variability of interest rates, slide zones, impending earthquake and habitual zoning battles, people want to be here so badly that they will purchase all sorts of trouble without much question or debate.  

In fact, you can go about trying to buy something for months without success even when doing battle over some pretty sorry looking digs. 

Remember those fabulous 70’s? Wide lapels, avocado green appliances and amazingly ugly wallpaper. Well, we had so many more houses on the market than potential buyers, that you could actually find a genuine Fixer Upper. I love the term and I love it with a true sense of nostalgia because this thing (the word and the object) seems to have become a lonely artifact of history.  

Oh, to be sure, we absolutely see places that need serious remodeling and some that ought simply to be bulldozed, but we rarely see houses, today, that can be bought for a significant reduction in price based on the volume of necessary repairs. 

I see this as a compression of the value in the market and here’s why. If you look at two houses in a similar neighborhood that have similar size, number of baths and other grossly defining features, the prices, at least in this market, may not be all that different, despite their conditions differing substantially. They’re compressed. 

This was what was different thirty years ago and is certainly different when you go back where your parents want you to buy in Sioux City (whiney voice: “Honey, for that kind of money, you could buy a house like your father’s boss has up by that golf course!”)  

When the market is less aggressive, the houses that need serious rethinking and repairing just get left on the pavement when the Flea-Market closes down. Not so here. The desire for ANY house in the Bay Area is so great that considerations that might have sent buyers walking away or, at least, bargaining the price down measurably in another time or place simply do not carry much weight in the here and now. 

This means that great houses and so-so houses are compressed into much closer cost proximity and sometimes into transposition. This is particularly true if you make some allowance for the variability of the market. A good example is what happens when we hit those few very hot weeks each year in which everyone in America has chosen to move to the East Bay from Podunk or Baltimore. At least once a year during this season, I’ll see two similar houses that for reasons I cannot fathom, sell for about the same price while being radically different in condition.  

Now, it’s certainly true that individual neighborhoods are strong controllers of cost but it still seems to me that the state of the property is one of the poorest predictors of cost that I see. This is pretty bad news for me since I’m in the condition business. 

Embarrasingly, what I have to say about a property may not be all that salient in the value of a house these days. Of course, I don’t trumpet this when I show up to inspect a property. I make damn sure to act as if my words are vital and that my absence is concomitant with capsize. Hey, I’m in business. 

I see this play out during inspections when, having identified an array of conditions, we will sit down with the realtor and discover that to ask for much price adjustment based on my findings is somewhere between slim pickin’s and negotiation suicide. Again, this is all market relative and was far less true when I started inspecting houses 19 years ago.  

Also, I’d like to be clear that this isn’t just a function of realtors trying to keep deals in play. I’ve seen enough deals fall apart to know that, despite their best efforts to get their clients to offer enough money, real estate agents can’t make their clients spend more than they want to and I’ve met buyers who’ve lost out on seven deals before they got into contract on the house where we meet. 

It’s too bad, really. I wish that I were working in a market where ramshackled shanties could be bought for a song and that remodeling brought handsome profits, but it’s too often not the case. This last part is kind of sad and it frustrates me to see one party market a house that’s been totally ignored for decades and make more than someone who’s brought a year of spit-polish and innovation into manifestation. 

So, in the end, this is kind of warning. Actually, it’s two. First, if you’re buying to fix up and remarket a house (a proud and worthy undertaking, by the way) be very, very shrewd and make those pennies squeak as they leave your hand. Be design-smart and cost conservative. 

And… If you’re a buyer, look at plenty of houses and be sure that you can live with the conditions your buying because they may not be a function of the price you’ve paid. 

I guess the good new is this. The reason all this is true is that we live in paradise. My wife and I work too much and don’t get out enough, but when we do, we realize that we live in an amazing place, rich in natural beauty, intellectual satisfaction, political righteousness and the best food on the planet. I guess we have to pay for these things and I guess we’re lucky that this lifestyle is available at any price, so I’m grateful. Cheers and Bon Appetite. 



Photograph: Matt Cantor. 

This house comes with a ‘bonus room.’