This story about a monster house in Brantford caught my eye. Seems like a building permit was issued in error and now the city has requested the addition be pulled down. That’s one side of the story and if that were the whole story that would not be fair. But this blog post isn’t about that. Its about the law of comparative value.
The law of Comparative Value
In real estate, the law of comparative value argues that you should buy the smallest or cheapest house on the street. The neighbouring houses bring the value of your house up.
Conversely, you should not buy the biggest house on the block or over-improve your home beyond what the neighbourhood can sustain. In this case, the neighbouring houses are going to keep the value of your home down.
The cost of enjoyment
Home buyers and homeowners often make value mistakes. For example, I made one this summer when I put in a backyard swimming pool. When it comes time to sell, at best I will get 60% of the cost to put in back. Same might be said for over improving an old townhouse in a poorly performing neighbourhood. But houses are not all about value.
Houses are very powerful. They tug on our emotions and ask us to defy logic. Whereas we should be considering the school and the neighbourhood first and then the home, we often only consider the home and then the neighbourhood and school second if at all.
Back to Brantford
That one has been going through the courts for a couple of years and may take a couple more. With this monster house though, the owner was wrongheaded to even consider building such a humongous addition in the first place, irregardless of the city’s error of issuing a permit to build it. He must have a very compelling reason for building it.
As an aside, I wonder if he drives a monster truck?
Photo source
A monster house and the law of comparative value
This story about a monster house in Brantford caught my eye. Seems like a building permit was issued in error and now the city has requested the addition be pulled down. That’s one side of the story and if that were the whole story that would not be fair. But this blog post isn’t about that. Its about the law of comparative value.
The law of Comparative Value
In real estate, the law of comparative value argues that you should buy the smallest or cheapest house on the street. The neighbouring houses bring the value of your house up.
Conversely, you should not buy the biggest house on the block or over-improve your home beyond what the neighbourhood can sustain. In this case, the neighbouring houses are going to keep the value of your home down.
The cost of enjoyment
Home buyers and homeowners often make value mistakes. For example, I made one this summer when I put in a backyard swimming pool. When it comes time to sell, at best I will get 60% of the cost to put in back. Same might be said for over improving an old townhouse in a poorly performing neighbourhood. But houses are not all about value.
Houses are very powerful. They tug on our emotions and ask us to defy logic. Whereas we should be considering the school and the neighbourhood first and then the home, we often only consider the home and then the neighbourhood and school second if at all.
Back to Brantford
That one has been going through the courts for a couple of years and may take a couple more. With this monster house though, the owner was wrongheaded to even consider building such a humongous addition in the first place, irregardless of the city’s error of issuing a permit to build it. He must have a very compelling reason for building it.
As an aside, I wonder if he drives a monster truck?
Photo source
57 – The Marshall Report – episode 57
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