I get many calls & emails each week from this monthly column that I write. The housing stock along the Pinellas beaches is old and tired, and does not have the proper elevation for FEMA regulations today, nor do they have hurricane windows or energy efficient items. The home room layouts and designs are very “1960” and that greatly affects the overall property value.
What do so many homeowners do in this situation? Many decide to put good money after bad, by putting on an addition to the tired home, only to find out that the old bones are still tired. They are restricted by the FEMA 50% Rule, and although you can get around that by a multiple stage process of permitting, construction, re-permitting, construction, etc., that process invariably costs much more time and money than starting over with a new home. It is extremely hard to believe that raising a home and building a new structure can actually be cheaper, but that is almost always the case, all things considered.
Within the past two weeks, I had calls came from over a dozen homeowners that were struggling with the decision to demo their existing home and building new. They know their existing home has much to be desired, but “Pulling the Trigger” to build new is a tough decision to make. The reality is that sooner or later that home will be replaced, and the longer they wait, the higher the home cost will be. Two of my homeowners last week had just spent about $80,000 remodeling their homes and then realized what a mistake they made. Now they are seriously considering biting the bullet and starting over.
Yes, it’s a tough decision to bulldoze a home that is still liveable and start over, but it truly is a good investment. Their lot values will continue to rise, but no inflation will any longer add to the value of the home itself. FEMA regulations have seen to that. I constantly get flyers in the mail from realtors that just listed a home on the water for $750,000. Great, but almost none of those homes will sell for anywhere near that dollar! The actual resale value is solely in the land of these aged homes below the FEMA established flood elevations. Most of those homes only sell for land value at about $400,000 – $450,000 on the water. That’s the reality of the Pinellas beaches today.
Remember, by taking some savings and investing in a new home today, you are not “spending” money, you are “reinvesting” in a hard asset that in almost all cases, will increase better than the savings account. The Tampa Bay Times reported recently that home values in the area rose 14.4% last year. Just a thought to start the year off!
GHD Construction Services, Inc. has constructed 6,000 homes since 1971, and has a new Solar model home at 14305 N Bayshore Dr., Madeira Beach. If you have any questions pertaining to new home construction, feel free to call me at 727.323.5119 x2004, or email me directly at tsmith@ghdcsi.com to request a meeting at our new model.
Article by Tom Smith