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Real Estate - Essay Example

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The person or couple would live initially in a rented apartment and maybe purchase all the furniture which they plan to use in their new home. Once this…
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Introduction: Owning a home is the dream of every person and this is one of the first aims once he or she is settled in a comfortable job. The personor couple would live initially in a rented apartment and maybe purchase all the furniture which they plan to use in their new home. Once this stage is over, the next step would be to find an agent or local builder and scout for suitable homes. The price of a home is usually calculated based on the cost per square feet that is prevalent in the area. This paper is an attempt at estimating the cost of my residence based on cost per square foot that currently exists in Charlotte, North Carolina. This exercise has two aims. One is to see whether my house will fetch a goof price in the market so that it can be bought by any of the young people searching for homes. If a good price is offered, then the proceeds of the sale can be used to buy a better house.
Prices in Charlotte:
My house is a two bed-room one and its floor area is approximately 1700 square feet. The above mentioned aim does not seem to be feasible since land prices across the country have fallen due to the recession that has hit the country. I had contacted a builder on the premise of wanting a new home. He said that the Charlotte market like most places in the country has become a buyer’s market and the prices had crashed since the start of the depression. He also directed me to a website to verify what he had said. It appears that the situation was far from satisfactory to a seller and very satisfactory to buyers. According to the website, the current square foot price as of March 1st, 2009 was only $95 for homes in Charlotte. This had fallen to the current level from a high of nearly $185 in July 2008. (Real Time Market Profile for Charlotte). According to the above figures the value of my home would be as follows
95 X 1750 = $ 166,250
In such a scenario, it will be worthwhile to compare prices if one wants to buy a ready made house or construct one instead. A search with an agent also shows that prices are low. It shows that three bed room houses are available in the market for at only slightly higher price than what was seen in my valuation. Prices of two and three bed room independent houses with similar or higher square feet are available at prices ranging from $165,000 to $169,000. One particularly attractive house with 1,800 square foot and having three bedrooms and two baths was available for 168,000 dollars. This means that the square foot price of the home was about 93 dollars per square foot. This comes to less than the market price as on March 1st 2009. This means that buying a house of the specification of my own home was cheaper than the price when calculated on the market price per square foot.
When estimating the cost of construction of a new house it is seen that it will be more expensive when compared to buying a house of the same dimensions. The contractor had informed me that the cost of constructing a house according to the dimensions of my home will come to approximately 120 dollars per square feet. That will make the property worth $210,000. This is much more expensive than buying a new home.
The different comparisons made in this paper were necessary due to the fact that the country is facing a recession and hence the market price does not reflect the real value of the property. As shown above, the market value per square foot was $95 per square foot for homes in March 2009. Per square feet value for homes available for sale was even less at the time of calculation. But construction costs have not come down to a great extent because of the prices of materials like concrete and wood needed for construction is not so cheap. Even though its prices have come down, the extent is not as great as the fall in property prices. If that were the case, the cost of construction a house would have been cheaper than buying one. This is because a profit element will exist in the case of buying which is not present if a house is constructed. The current level of the economy is making it impractical to use only the market value calculated on the basis of square foot.
Works Cited
Real Time Market Profile for Charlotte. Altos Research. 2009. 03 Mar. 2009. . Read More
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