Bang! Bang! Is it duck season or messenger season? From my observations over the last few months it is clearly the latter in Wanganui.
The overwhelming overreaction to the independent expert analysis from economist Shamubeel Eaqub appears to be indicative of why Whanganui is still spinning its wheels and failing to progress after decades of whinging: decision-makers in our city appear to refuse to accept all forms of constructive feedback and suggestions to adopt new ways of thinking.
When dialogue is shut off before it begins we are ensured that no change will occur. This is a consistent pattern I have observed while living here. Correct me if I am wrong, but isn’t this what puts the P in Provincialism? Forget adding an H to Wanganui, let’s just go ahead and rename the city “De-Nile.” Egypt won’t mind.
I will admit that thinking different is not easy, but failing to do so can be expensive. Let’s take housing and renovation as an example. Conventional wisdom is that investing in property will always give a positive return because house prices always rise. Everyone in Wanganui knows this.
More convention urges us to put in new kitchens and new bathrooms as these add value to our homes and we will easily recoup the investment when it comes time to sell. Everyone in Whanganui knows this too.
New Kitchen: No Return
Nek minnit, QV.
About a year ago I was taking photographs of the absurd process of bulldozing sand from Castlecliff Beach into the Tasman Sea when the driver walked over for a chat. We had a great conversation about sand, wind, waves, Council, America, and Detroit (my “home town”). But what really concerned him was the recent valuation of his home. After spending heaps of money renovating the valuation did not come close to reflecting his investment.
Real estate agents tell me that many clients struggle to “claw back” any and every dollar they have spent doing up their homes. With rare exception, I suspect that most homes purchased and renovated within the last eight years are being sold at a loss. My family is looking at this very proposition ourselves, which is especially disconcerting because we invested heavily in energy efficiency in addition to the new kitchen and bathroom.
When it comes to the energy performance of a home, QV does not recognize a price premium. In other words, if you spend $30,000 on solar energy, super-insulation, double-glazing, etc. don’t expect to recoup that investment when you go to sell. Even if that investment will save the next occupants $30,000 in power over ten years it is not recognized as a valued asset of the home.
Justifying this position, the friendly QV man who came to our home after we challenged its mind-bogglingly low valuation told me, “The market does not show that it values energy efficiency.”
Floor to Ceiling Native Rimu
But to what extent is this a chicken-and-egg scenario? If QV does not value eco-renovation then potential buyers will look at the valuation and be less willing to pay for what it cost to do the work in the first place. On the other hand, how many enlightened buyers will it take to prove to QV that the market does value energy performance?
To review, evidence suggests:
- doing up a kitchen and bathroom do not increase the value of a home in Wanganui;
- improving the energy performance of a home in Whanganui does not increase its value.
- doing both…R.U. Nutz?
Repurposed Doors and Coal Range
So the moral of the story is that unless you plan to remain in your home for a very long time it is highly unlikely that you will break even on the costs of renovation. Of course this will not come as welcome news to many people in our community.
Go ahead and shoot me. It is a good day to die.
Workshop: Low-Input / High-Productivity Gardening
Thoughtful design and management of a vege garden can increase productivity and decrease the hours of labour. Invest two hours in this workshop and save dozens of hours weeding your garden.
Sunday 9th November, 3-5 PM. Registration and deposit required.
06 344 5013, email@example.com
One thought on “No Return on Investment: Selling a Home at a Loss”
I guess it depends on your buyers, but I’m pretty sure that stating any or all of “double glazing/fully insulated/solar PV/orientated for sun” is going to attract buyers. I reckon the QV man is behind the times, don’t let it get you down! The house looks great. Maybe you could sell it privately so you can control the marketing. I’m amazed that one of your blog readers hasn’t bought it already.