Dear editor,
I see in the paper Iola is wanting their local builders to build the housing stock. One of the first things you need to fix is the value of the homes not just in Iola, but all of southeast Kansas.
I would be willing to build a house in Iola if I could make a small profit for my effort. The problem I am talking about is with all the repossessed houses by banks being dumped on the market the last five years. With still a lot more to come, the repos drive down the value of property in most cases because most need a lot of repairs.
To make these houses marketable, most require new roofing, carpet, siding, heat and air and painting with costs ranging from $15,000 to $40,000. For the last five years, these homes have comprised a sizable share of the housing market. When someone wants to sell their home, the appraiser uses these homes to compare the value for homes sold in the last six months because they are the majority of the ones selling.
You don’t need to spend $40,000 to make your home comparable. Let’s say you bought a house back before 2008 for $130,000 and you spent $10,000 fixing it up. Then you lose your job and have to sell your house. You price it at $140,000 and get a buyer willing to pay the price, but the appraiser can only find comparative prices at $110,000. You then are forced to take a loss and move on or in some cases the house is repossessed by the bank which places it in foreclosure for a year further, driving the value down even more.
The government has set rules appraisers have to follow or they can lose their licenses. I feel the government is going to have to give these appraisers some more wiggle room to adjust these values up or housing in southeast Kansas is going to remain stagnant for another 10 to 15 years.
I was going to build a spec home in Iola that I thought I could build for $140,000. This was with no profit built in. Additional expenses include a 6 percent Realtor’s fee, which in this case would be $8,400, and title insurance and deed for another $800. One of the Realtors told me the house would sell for only $100,000. A certified appraiser confirmed the Realtor’s estimation.
So what will it take to bring these values back up? Buyers who are willing to pay cash or willing to pay say a $45,000 difference. Well, we know that’s not going to happen.
The buyer will also have to pay a down payment. Twenty percent down would be $29,0000. A bank is only going to loan the money on the appraised value.
Is the city willing to pay the difference, in this case $45,000, to get these values back up?
In the long run it would generate a lot more tax revenue, but I can’t see this happening. Something was said about the chicken and the egg. I have always been the guy who thought the chicken came first. B&W in Humboldt is doing a tremendous job of adding jobs to their town, but I don’t see anyone rushing in to provide new homes. They may have the same problem.
David Comstock,
Colony, Kan.
Letter to the editor — November 19, 2013
