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A Semi-Myth: Rising Tides In Real Estate Values

There are time-worn real estate adages that never seem to go away. “Location, location, location” is one of them, and it still applies. But what about the one used in every “fix-and-flip,” or “fix-and-occupy” program on HGTV about buying the worst home in the best neighborhood?

For all those experts who push buying the most run-down place in the best part of town as a surefire winning investment because the only way its value can go is up, it may be time to take a second look, according to by Spencer Rascoff and Stan Humphries’ book Zillow Talk: The New Rules of Real Estate.

The authors took a hard look at the cheapest 10% of homes in a given ZIP code, trying to understand what buyers were getting when they purchased a home priced well below a neighborhood’s median value. If the adage about “rising tides” were true, the bottom 10% of houses would need to perform better than the more expensive homes in their neighborhood. Instead, they found that only rarely does the bottom 10% outperform the top 90% of houses in a ZIP code. On average, these bottom-tier homes do neither better nor worse than the others.

Their findings indicated that there may be less demand for lower-priced homes in nicer neighborhoods simply because, in fancier areas, upscale homes get the most attention. Buying a neighborhood’s worst home, then, is a neutral investment strategy.

Source: TBWS

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PHONE: (303) 649-1245

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ADDRESS: 10700 E Geddes Ave, Suite 155 Englewood, CO 80112

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Terms and Conditions Apply. HOUZ MORTGAGE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet Houz Mortgage’s and/or investor underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Rates and Terms are subject to change at any time without notice and are subject to state restrictions. Licensed by the Colorado Division of Real Estate. Houz Mortgage loans are originated by Colorado Homesmartz, LLC DBA Houz Mortgage, NMLS # 1578407. (www.nmlsconsumeraccess.org)

Lowest rates are reserved for most creditworthy applicants; not all who apply will qualify for the top tiers. Rates and APRs are subject to change and may not be available at the time of lock or loan commitment. Interest rates are subject to potential increases over the life of the loan, once the initial fixed-rate period expires. APR for adjustable rate mortgages are subject to increase after fixed rate period and does not include 3rd party costs or prepaid interest. Please contact one of our Licensed Mortgage Loan Originators at (303) 649-1245 for a customized rate and payment quote.


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COVID-19 Update

March 12: Today, we closed Houz's Englewood office and asked everyone based there to work from home as a precaution due to COVID-19. Houz was prepared for this and is fully functioning during this time. Please do not bring any paperwork to the office and make alternative arrangements by calling (303) 649-1245 or by contacting your personal loan team until further notice.