You should select a new home with an eye to resale

SMART MOVES

November 11, 1990|By ELLEN L. JAMES

They're a young couple from a horsy suburb in northern Baltimore County. Snug as they are in a carriage house they rent for just $500 a month, they yearn for a place of their own. But they're troubled by the notion that what they select might fail to appreciate or, worse, fall in value.

"No one wants to be burned," the young man observes.

The couple's concerns about home values are not without basis.

Between September 1989 and last September, the median U.S. home increased in value just 0.5 percent -- well below the level of inflation, points out Richard Peach, an economist at the Washington-based Mortgage Bankers Association. And some researchers have predicted median values could fall.

But real estate experts say there are ways to beat the odds on the property you buy. They say some properties are far more likely to gain in value than others. And there are well-established ways to predict which are which.

"Ask an awful lot of questions. Try to suppress your emotions. If you fall in love with a place, then there's no sense in getting into these practical considerations. But if you buy it with a view to reselling, you need to be very practical and pragmatic," advises Martin Rueter, a senior vice president with the Century 21 chain.

Any realty agent with access to the Multiple Listing Service should be able to provide you with composite figures indicating recent changes in home values in neighborhoods you are considering. In addition, experts offer these pointers on picking a property that will gain in value:

* Pick a house that's a classic favorite for your area.

A California contemporary with lots of glass and patios does well in many West Coast communities with lifestyles heavily oriented to the out-of-doors. But in Maryland where the climate is cooler and lifestyles more conservative, a traditional two-story colonial will do better when it comes to resale.

* Avoid buying into a community where For Sale signs abound.

A large inventory of properties for sale could well indicate a negative economic trend for the area. Perhaps a major employer has closed a plant or a company relocation has caused a number of local people to move. Too much competition among sellers could push down the value of your property and you should be especially wary if you expect to unload the place within three years.

* Check out the neighborhood to see whether there are upcoming changes in roadways.

Homes in the immediate vicinity of an expanding highway system tend to lose value, since most buyers dislike road noise and worry about hazards to children. But if road improvements aren't too close and make the neighborhood more accessible to commuters, they're a plus.

* Steer clear of an overly improved property at a premium price. You may be willing to pay extra for the midsized rancher with the new pool, upgraded carpets and finest appliances, but the people to whom you sell your home are unlikely to share your sentiment. Usually it's the overall house and neighborhood that determines price, not exceptional upgrades.

* Opt in favor of a trade-up type home that will appeal to someone in the 35-to-55 age group.

"The baby boomers, many of them in their peak earning years, are now moving into that age group," points out Mr. Peach of the Mortgage Bankers Association. Since many baby boomers are still raising young children, they prefer single-family homes with yards that are located in safe neighborhoods, near good schools.

* Pick a property that is well built.

"There are a lot of new homes built these days that are aesthetically pleasing but from a quality standpoint are junk," Mr. Peach says. "You can walk into a $400,000 or $500,000 house and the furniture jumps because the floor boards are so thin that the floor is actually sagging as you walk across it."

* Look into the quality of the public schools near the community where you're looking to buy.

Even if you have no children and intend to have none, you need to think about SAT scores, class size and other statistics that provide clues to school quality. The reason is that when it comes time to resell the property, would-be buyers will be heavily influenced by the quality of schools in the area.

"Schools are always the No. 1 priority in selecting a home," says Joseph Zick, sales manager at Century 21 H.T. Brown in Columbia.

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