ironweed
03-27-2006, 03:34 PM
Thought this was kind of an interesting article, even if it is little more than a glorified internet posting. Bevels nicely into Fade's thoughts re: "Peak Oil." Well, we shall see. I honestly don't think things are as bad as described in the article, but that may just be my area.
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March 25, 2006 - High Commuting Costs Push Rural Property Owners Past the Tipping Point
by Down but not Out in Rural U.S.A.
What is happening here is not unique but is occurring in other rural areas like mine as well, or will be soon. This is my Report from the Front. Hope it helps fellow iTulip.com members.
I live in a rural area about an hour and 20 minutes north of a major U.S. city. I moved here in 2000, selling a home in the suburbs for a $55,000 profit after living in it for three years. I trained horses for other people and was looking for a place to hang my own shingle rather than work out of other people's barns and pay to board my own horses there. Having once owned my own successful retail business, I ran the numbers and concluded I could stay home, board and train horses and earn more than I could by working off the farm. My husband could continue to work in his present job and commute.
I paid $140,000 for a fixer-upper house on 40 acres. The house needed work, but the land was everything I dreamed of. Pastures, meadow, woodland. Plenty of room to build the barn and arena, and long trails through the woods for my boards. I put $45,000 down on the property and spent a year cleaning it up: building fencing lines, a new indoor arena with attached horse barn, and so on. I paid for half that building with my own money and financed the other half with a home equity loan. To save money, I did a lot of the work myself, including installing the water and electric, building the stalls, swinging a hammer to build the barn and arena. Lots of sweat equity.
In no time at all I had horses here for both boarding and training. I was doing well. Better, in fact, than I had projected. Life was good. That was in 2002.
Family Challenge
A year later, our troubles began. A member of my family became disabled. He requires enough daily care that I had to give up boarding and training.
Last year, in 2005, we decided to sell the place and move closer to family and doctors. I spoke with real estate agents and others who had property for sale. It was boom-time for our area. People were moving into the area in droves from the suburbs. Land prices had more than tripled from the time I bought my property in 2000. “This is good,” I thought. Everything the agents, bankers and friends said was encouraging, that I’d get several times what I paid for the property, especially if I fixed up the house.
The construction was solid but the house needed updated windows, flooring, and siding to let it sell for top dollar. No problem. I did the work myself. I spent the summer fixing the house, with just a little hired help with the siding as I needed another pair of hands. I was able to put in oak lam floors, all new windows, ceramic tile, siding, lighting, paint, all for about $8,000. Probably saved two or three times that by doing the work myself.
Everyone I talked to figured the place would sell in 30 to 60 days. On the advice of my agent, I decided to split off 20 acres of the 40 and make 4 parcels and then sell the house and barns on the other 20 acres. The listing price was $390,000 for the house on 20 acres, with the remaining lots priced at $60,000 per five-acre lot. I figured I would be able to sell for near asking price -- that's what the market was doing at the time
Regional Tipping Point
Then Katrina hit in 2005. Gasoline prices skyrocketed. Most of the people in the area commute to the city for work. The cost of gasoline made that commute much more expensive. When I moved here gasoline cost about $1.20 a gallon. Recently I filled up at $2.69. When I moved here, $400 a month was my budget for gasoline. The same amount of fuel would cost me close to $900 a month. Just to commute. Because of the added commuting cost, people are not buying property out this far anymore. Real estate sales slowed to near nothing.
Soon after, the house of cards really started to fall. One local builder went bankrupt, unable to sell over 20 homes he built in a development. Those 20 houses in foreclosure fed the buyer's market, driving prices of other homes for sale down farther. Then another builder went bankrupt, then another. In the past three months, six builders have filed in the area. The number of houses in foreclosure is staggering. They can be had for next to nothing. Banks are jumping through hoops trying to find people to buy them. The local newspapers all have classified ads reading "Builder's inventory Reduction Sale."
http://www.itulip.com/reportfromthefront.htm#Rural_Property_Owners
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March 25, 2006 - High Commuting Costs Push Rural Property Owners Past the Tipping Point
by Down but not Out in Rural U.S.A.
What is happening here is not unique but is occurring in other rural areas like mine as well, or will be soon. This is my Report from the Front. Hope it helps fellow iTulip.com members.
I live in a rural area about an hour and 20 minutes north of a major U.S. city. I moved here in 2000, selling a home in the suburbs for a $55,000 profit after living in it for three years. I trained horses for other people and was looking for a place to hang my own shingle rather than work out of other people's barns and pay to board my own horses there. Having once owned my own successful retail business, I ran the numbers and concluded I could stay home, board and train horses and earn more than I could by working off the farm. My husband could continue to work in his present job and commute.
I paid $140,000 for a fixer-upper house on 40 acres. The house needed work, but the land was everything I dreamed of. Pastures, meadow, woodland. Plenty of room to build the barn and arena, and long trails through the woods for my boards. I put $45,000 down on the property and spent a year cleaning it up: building fencing lines, a new indoor arena with attached horse barn, and so on. I paid for half that building with my own money and financed the other half with a home equity loan. To save money, I did a lot of the work myself, including installing the water and electric, building the stalls, swinging a hammer to build the barn and arena. Lots of sweat equity.
In no time at all I had horses here for both boarding and training. I was doing well. Better, in fact, than I had projected. Life was good. That was in 2002.
Family Challenge
A year later, our troubles began. A member of my family became disabled. He requires enough daily care that I had to give up boarding and training.
Last year, in 2005, we decided to sell the place and move closer to family and doctors. I spoke with real estate agents and others who had property for sale. It was boom-time for our area. People were moving into the area in droves from the suburbs. Land prices had more than tripled from the time I bought my property in 2000. “This is good,” I thought. Everything the agents, bankers and friends said was encouraging, that I’d get several times what I paid for the property, especially if I fixed up the house.
The construction was solid but the house needed updated windows, flooring, and siding to let it sell for top dollar. No problem. I did the work myself. I spent the summer fixing the house, with just a little hired help with the siding as I needed another pair of hands. I was able to put in oak lam floors, all new windows, ceramic tile, siding, lighting, paint, all for about $8,000. Probably saved two or three times that by doing the work myself.
Everyone I talked to figured the place would sell in 30 to 60 days. On the advice of my agent, I decided to split off 20 acres of the 40 and make 4 parcels and then sell the house and barns on the other 20 acres. The listing price was $390,000 for the house on 20 acres, with the remaining lots priced at $60,000 per five-acre lot. I figured I would be able to sell for near asking price -- that's what the market was doing at the time
Regional Tipping Point
Then Katrina hit in 2005. Gasoline prices skyrocketed. Most of the people in the area commute to the city for work. The cost of gasoline made that commute much more expensive. When I moved here gasoline cost about $1.20 a gallon. Recently I filled up at $2.69. When I moved here, $400 a month was my budget for gasoline. The same amount of fuel would cost me close to $900 a month. Just to commute. Because of the added commuting cost, people are not buying property out this far anymore. Real estate sales slowed to near nothing.
Soon after, the house of cards really started to fall. One local builder went bankrupt, unable to sell over 20 homes he built in a development. Those 20 houses in foreclosure fed the buyer's market, driving prices of other homes for sale down farther. Then another builder went bankrupt, then another. In the past three months, six builders have filed in the area. The number of houses in foreclosure is staggering. They can be had for next to nothing. Banks are jumping through hoops trying to find people to buy them. The local newspapers all have classified ads reading "Builder's inventory Reduction Sale."
http://www.itulip.com/reportfromthefront.htm#Rural_Property_Owners