Small Home Gazette, Spring 2008
The Housing Crisis and the Bungalow: Effectively Weathering the Storm
As most of us are aware, the housing market is having some troubles lately, with the number of foreclosures increasing and home prices generally falling. Homeowners are concerned about their homes losing value, while buyers are looking for a nice home and solid investment.
I was recently asked “How have bungalows been affected by the current housing market?” There are many factors that affect house values, but generally, bungalow neighborhoods are weathering the housing crisis well. Location, appeal and practicality all boost the bungalow’s resiliency and are helping it maintain its value.
There are different types of value attributed to a home—the two most common are tax value and market value. Tax value is the value the municipality places on the property for tax purposes. This value is set by the county and does not necessarily reflect market value. Market value is what buyers are willing to pay for a home. This value is often more than tax value. For instance, as of this writing, in the Longfellow neighborhood there are 14, 3-bedroom, 1-bath homes for sale. The average list price is $194,000, while the average tax value is $172,000.
Everyone has heard the classic quote “Location! Location! Location!,” and there is a great deal of truth to this. Currently, there is a renewed interest in living nearer to the downtown areas. According to statistics from the Minneapolis Area Association of Realtors (MAAR), 5,392 homes were sold in the cities of Minneapolis and St. Paul through the third quarter of 2007, while 4,244 homes were sold in the nearest surrounding seven counties combined—an 18 percent difference.
Additionally, in the neighborhoods where bungalows are plentiful—Longfellow, Nokomis and the Southwest neighborhoods of Minneapolis as well as the Highland Park, Merriam Park and Mac-Groveland neighborhoods of St. Paul—the average home sale price increased in 2007. This suggests that traditional neighborhoods are maintaining their value and appeal, and homeowners still want to live in these neighborhoods because of the homes, the quality and the value.
Appeal of the Bungalow
The bungalow still holds its appeal for all types of homebuyers. With the Internet, most buyers perform their own initial home searches and often choose homes to view from exterior appearance. First time homebuyers looking for comfortable homes in established neighborhoods find bungalows the home of choice. The curb appeal, original woodwork, built-ins and hardwood floors have buyers commenting that bungalows “feel like home.” Baby boomers are also gravitating back to the city and to the homes that bring back nostalgic memories of childhood.
I recently was contacted by a woman living in Connecticut who was browsing on the Internet and saw her childhood home in the Longfellow neighborhood for sale. She contacted me for details and planned to travel to Minneapolis to tour the house and was considering purchasing it for a second home—simply because it reminded her of growing up in Minneapolis.
Practicality is another reason buyers are drawn to bungalows. Homeowners are adapting the bungalow to modern living—without major renovations. The open living and dining areas that are characteristic of many bungalows are being blended. As many families do not use a dining room regularly, they are creating one large living space. Built-in buffets, originally meant for china, are adapted to hold CDs and DVDs without compromising their character. Bedrooms that are deemed too small are adapted to office, storage and extra closet space. Hardwood floors, in addition to being aesthetically appealing, are extremely easy to keep clean, which is great for busy homeowners. Basements are being finished to create entertainment rooms, media rooms or extra bedrooms. In many ways, the bungalow is being effectively adapted by modern homeowners.
The problems in the housing market are not over, but it will eventually correct itself There are still many buyers looking for quality homes, and those areas that are traditionally popular continue to maintain their value. Bungalows are not obsolete—on the contrary, they are adapted successfully to the modern homeowner’s needs. As a result of their flexibility, aesthetic and location they are maintaining their value in the face of the current housing market.
I counsel current homeowners not to fear the current market if selling their bungalow is necessary—there is always a demand for quality.
Christopher Dark is a homeowner in Minneapolis.