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The dangers of "over-improvement"

Posted by Scott Van Voorhis March 11, 2014 10:55 AM

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I often drive past a large, lavishly renovated turn-of-the-century house on the way to see my sister in Norfolk.

It's been a couple months and the for-sale sign is still up. I peeked inside one day during an open house. It's gorgeous, just like one of those dump-to-palace jobs that HGTV loves to profile.

But there's a problem. Priced at a number approaching $500,000, it is out of place with the more pedestrian, older and more modest homes that surround it on either side of a busy road leading into Millis center. It's a gem in a sea of peeling paint.

Still, are there so many of these over-improved homes out there that it is having a negative impact on the market?

Not sure, but the Massachusetts Association of Realtors says its concerned, offering this warning in a press release about the latest pending home sales numbers.

Here's what the Realtors group is saying.

In this market, REALTORS® are cautioning homeowners about the decision to increase the size of the home they're in rather than moving to a larger home.

"Over-improvement can result in houses that are out of step with the neighborhood, won?t recoup the investment and/or will permanently remove affordable homes from the stock available for first-time buyers," said MAR President Peter Ruffini, regional vice president at Jack Conway & Co.

OK, needless to say homeowners who decide to fix things up instead of buying a larger house is bad for sales, but it is still a legitimate issue to debate.

That said, count me among the skeptics - so far, overly ambitious home renovation and expansions don't appear to be holding back the market.

The number of pending sales - homes put under agreement but which have not officially changed hands yet - hit their highest level in February since the winter of 2004, the trade group reports.

The number of homes put under agreement hit 3,587 , a more than 20 percent increase over February 2013, while the median price surpassed $295,000, a 7.5 percent increase.

Pending condo sales rose 17 percent in February, according to MAR.

Are homeowners with crazy ridiculous renovation and expansion plans messing up the real estate market? Are you an over-improver?

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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