I live in New England. We have lots of historic houses. Something built in the 30s would not even be considered "old" here but I understand what you're saying.

Historic homes are a unique niche in the market & do run to their own drummers. Fluctuations in new construction prices bounce right off the historic home. But, there are some things that cause historic homes sales to falter. Here are a few...

1.) Popularity ebbs & flows. During the 80s & 90s historic homes were very popular during the "country" decorating eras. Design aesthetics change over time. Right now, historic homes are a bit out of favor.

2.) Historic homes have a more limited market. This tends to keep a tighter price range...not as much appreciation but also not as much downward pressure during economic cycles.

3.) It's VERY expensive to restore an historic home...often costing far more than resale value will support. Many people who purchased & renovated historic homes during the 80s & 90s are now unable to recover their costs.

4.) You have to own a older home because you love it. It will be expensive to own. Repairs cost more & are often unforeseeable. They own you rather than the other way around.

5.) Utility costs are, generally, higher due to less insulation, construction methods, inefficient furnances, etc. In today's world, higher utility costs are a definite negative.

6.) Functional obselescence - most older/historic homes suffer from functional obselescence to one degree or another. Almost always, they have few closets and those that do exist are small. Rooms are small running counter to today's open floorplan styling. Bathrooms are small & usually difficult & expensive to expand & update due to space constraints. Kitchens are just money pits in older homes.

7.) Lastly, location affects older homes significantly. By the fact that they have been around for awhile they are often located in inner-city areas sometimes surrounded by less than desireable neighborhoods. This varies tremendously house to house. Some historic homes, of course, are located on a street full of them & command very high prices just because of location. There are a lot more though, especially the fixer-uppers, that are located in very mixed neighborhoods. Location is always important in real estate & with the older/historic home it's doubly important. In my area, there's a beaufully restored 18th century home on 1.25 acres that's priced at almost a give-a-way level. It hasn't sold in the past year...it's sandwiched between a Harley dealership & a pizza parlor on what is now a heavily traveled road (used to be the old Boston Post Road). It's very sad because the house is wonderful.

I've owned two historic homes one built in 1848 & the other in 1887. We loved both of those houses & have wonderful memories of each. However, I also remember that upon first moving into the one built in 1848 we were unable to heat the kitchen to over 48 degrees! The kitchen was the property's smaller of two barns that had been moved & attached to the main house. There was NO kitchen, per se, when the house was originally built...just a cooking hearth. Obviously, there was no insulation in the 'barn' whatsoever. It cost a pretty penny to remedy that rather brisk morning air in the kitchen! Great home though...had seven working fireplaces!

You need to watch the market for homes of the age that you're considering for purchase instead of the overall market. Are you working with a REA? They will be able to pull comps of just properties similar to what you want. Then, you'll get a much better idea of how the market is moving in your location for these hard to comp properties.

I guess my long winded response is that, yes, you're correct. Older home prices do not necessarily move in tandem with new construction.

I wish you much success & enjoyment with your historic home purchase when the time comes. I can't imagine myself living in new construction. I'd so miss the patina an older home exudes.

/tricia

location - location more important than ever with the rise in the cost of gasoline. I don't think that the small, old bungalow I have 2 blocks from a major university has lost a dime. On the other hand, some really beautiful new construction is languishing because of the distance to jobs and amenities. The worst off are the new subdivisions that as yet have no infrastructure whatsoever.

What you should do depends very much on what is important to you. We can't help you with that.

Here's my utterly unscientific opinion.
What are older homes made of? Plaster and lathe. And two-by-fours that actually measure two inches by four inches. (Fancy that!)
What are new houses made of?
Drywall.
New houses (can't call them "homes") rarely have any sort of trim or molding around doorways or windows. They are boringly bare bones, and devoid of personality or character.

With gasoline prices as high as they're going to stay, most smart people are opting to live IN the city. And as you so aptly observed, that's where the good old bungalows, cape cods and foursquares are. Built to last!

In the interest of fairness:
one thing new construction has going for it that's sadly lacking in many old homes: more than one outlet per room. And grounded, at that! When I'm in a friend's new(er) house, I practically swoon at the sheer number of outlets.

Yes, this new construction is very cookie cutter, and HOA communities just are devoid of personality. It reminds me of 1950's track housing, one mailbox after another.
I cant do it. I cant go new construction. Iguess Iwill pay a higher price for an older home (that seems like an oxymoron to me somehow).
Thank you Tricea for the insight on older homes. When I originally thought about older homes I looked into all the expenses and sacrifices associated with them. I though the 'open concept and open layout' popular in todays homes would help me geta deal on a boxed up, closed in older house, but after watching the listings for 8 months, I am left wondering "where are the deals?" "When will I see dramatic price drops?" I will be the fool that paid full price for my 1900 victorian when my friend bought her new construction for $60,000 less than asking price. I will bwe quiet while she smirks at her great deal. And I will smirk when she puts her house up for sale in ayear saying she is bored of it and I still wake up everyday wondering how my house will entertain me next by breaking something, asking me to sacrifice some modern convience or revealing a piece of history that I never knew existed. *sigh* I cant wait.

Sorry for the poor typing. My keyboard sticks. And there is no edit button.

Here's my dilemma:
I live in an older home (1920s) and we are on the market because we need something bigger. I, too, love the look and feel of an older home but I just can't go through with the demolition, construction, the plaster dust, etc. involved in restoring an older home again. So a new home would be great, right? Wrong. Not in my area. All of the newer homes are built either on water or too close to high tension wires. The ones that aren't are just way over the top expensive and huge! I wouldn't want to pay to heat them or cool them. Okay, so look at the older homes. Cheaper? Some. But the ones in my price range need more work than we originally put into this home! We are very frustrated with the situation.

"...I practically swoon at the sheer number of outlets..."

I grew up in a house built in 1954. When it was built my father insisted on an outlet on EVERY wall. The builder thought he was crazy. No one would ever have that many things to plug in. I suspect the current residents wish there were more.

Oh, and IMHO, the people make a house a home - not the architecture. It also bugs me when REAs use the word "home" to refer to a SFH as opposed to a condo/apartment. It seems like a tactless way to say a person who lives in an apartment is deficient.

It's very easy to over-generalize: All old houses are well built masterpieces and all new ones are junk. That's not true. 'Historic' is worth the effort. OLD can be just plain old -- and obsolete in many senses of the word.

It's probable that the OP's real problem has more to do with location than with the age of the houses. You can't beat great location. IMO, the best of the best is a great location with a great NEW house on it. It's what we aimed for.

We tore down a 1950s ranch on an acre in one of the most desireable neighborhoods in our town and built a tight, new house on the lot. We have all the 'pretties' of an old home (mouldings, hardwood floors, etc.) AND the advantages of modern building materials and skills. The scale of our home and its style make it fit in with the much larger historic homes on larger lots at one end of our street. Since we built, four other small, old ranches on one-acre lots have been replaced by new homes -- beautiful ones for the most part. They wouldn't bring the $$$ they do in a poorer location.

Yes, maybe it is the location that is costing me? It is the fact that it is a 100 yr old building~ even though it needs ALOT of repairs? Something is causing these houses to be listed at 250k when a new construction McMansion sits 30 min away listed for 50k below initial asking price when the two houses have been listed for the same amount of time. Old building in need of lots of repair still holding firm at 250k, McMansion is available now for 200k. And its not just one example, there are streets with 3-4 old houses listed for 250k, and there are new developments with 3-4 new houses with bargain prices. The old houses are holding steady and I dont understand who in todays economy has the money for a house, plus has an extra 100k in reserve for repairs and such. I am a newbie home owner, I am not looking in the best or most desirable housing neighborhoods! I am not looking in even the 350k neighborhoods hoping to score a 250k deal. I am looking in rows of 90 yr old huge victorians that have rotting foundations, weeds overgrowing, bars on the lower windows neighborhoods!
And in todays economy, I dont understand who has the money to list their very old house for 250k and just wait for months and months without lowering the price at all.
grrr....grrrr...

Very likely the very old house has no mortgage. The owners can hold firm on the price because the value is fixed in their minds - they THINK their house is worth that much, and won't accept less. Maybe it is, maybe it isn't. Tricia is right, the charming old wreck is going to own you, not the other way around.

Some people like dogs, some like cats. It would be a boring world if we all liked the same thing, after all. But if you have kids, you'll want room, closets, at least two working bathrooms, a yard, relative safety and good schools. To me, no amount of "charm" can overcome bars on the windows. I was born and raised in such neighborhoods; I currently live in an area "in between" the really nice and the not-so-good. I wouldn't voluntarily step foot in the really bad neighborhoods - been there, done that. I'm not the type who faces down drug dealers and comes home to find the house burned down (which has happened in the last month to four different homeowners in such a neighborhood in our city).

All newbie homeowners have generally stretched to buy their first house. They don't have the luxury of $350K+ in free-and-clear home equity, plus substantial retirement assets and high income. Having only bought our first home at the age of 43 in 1989, I remember very clearly how extremely painful it was financially for the first ten years. Now we are way, way past that stage. We can tell a RE agent our home is worth X amount of dollars and we won't sell for less, because we don't have to sell anyway.

Do we have "charm"? Nope. This 1940 cottage had zip charm to begin with! Talk about the crappiest, most g*dawful construction possible - gutting this place was a mercy killing, I assure you. To be honest, we should have done what chisue did and knocked the whole thing down to start over again. Instead we stayed within the original four walls, but at least we have been able to enjoy 20 years of a totally remodeled, beautifully updated redesign with tons of light, huge storage, full insulation, and no problems with problem, sewage, electrical or roof.

Some building codes are overkill, some are nonsensical. But most have made our house much more comfortable and safer. In a perfect world we'd have both charm and efficiency, high-quality construction and modern amenities. Unfortunately life is seldom that accommodating, LOL.

Our last tax assessment all of the homes that are old (i.e. pre 1900) were assessed substantially higher than newer homes. It didn't seem to matter if they are in the Historical registry or not.

I live in New England and grew up in Boston in an apartment. I've been living for the past 5 years in a new Cape in central MA. Although it is a very cute house and we made some upgrades, I've always wanted to live in an old house. In our search for on old home we decided to build, again!(because we found our dream piece of land). We did not let go of the idea of an old home, and decided to do an Antique reproduction. So we will have a New/Old home when we are done.

Jenn

My fiance and I have been looking to buy our first home for almost a year now. We have been looking for an older home (pre 1930's), because we love the historical feel, especially victorian architecture.

A lot of us have that same dream. When I was a teen, I was dating a guy that was in a fraternity that was out of a beautiful Victorian. I remember the stairway, the flowers that were engraved in the wood. I remember the "dome room" and while it was a PITA to put furniture in, amazed me every time I went into it. I remember beautiful moldings, everything was etched and 3 or 4 fireplaces. It had a decent sized kitchen from what I remember, also had a servant room. Man I loved that house and swore that one day, if I could afford to have the house moved I would. The house was located in one of the worst neighborhoods. You had to lock your doors to drive there and run in the house. I bet that in it's day, it was one of the grandest houses. They ended up knocking it down, don't know when but I drove by about 16 years ago, there was nothing on the lot.

Anyway, a lot of us have the same dream, to own a beautiful, grand house. Reality is the lack of things needed to live in it in today's world as Tricia said.

Since you are not married with kids yet, it wouldn't really matter much, you would probably get by fine. Once you have kids and they start getting older is when you will notice how hard it is to raise a family there unless you luck out and get a house that has larger rooms where you can make closets, or one that has a decent kitchen.

I wonder then if my fiance and I should actually change our dream to accomodate the current economy and the deals available?

IMO, this might be a good idea, at least for now.
Being newly married can be stressful. Unless the 2 of you are currently living together, you have to learn to live with your partner.
How do both of you handle stress? Buying a house that you are working on all of the time is very stressful and could eventually start pulling you apart. You'll come home from work some days so tired but you have to sand & throw another coat of spackle on, or paint, or run out to the home store to buy supplies.

Hubby & I worked on our last house starting 2 years after I moved in. We removed paneling, faux brick, painted, put in floors as well as putting a new floor frame on a concrete slab in the laundry area to build it up so that we could put a floor down. By the time we sold we were tired & cranky. Add to this a roof, electric upgrade, plumbing, which was a job in itself since there was only 1 shutoff valve, which meant we lost water for the day. We also did central air, a hot water heater as well as new furnace, and had planned to redo all of the baseboards as well.

Are there any houses that are in between the old house and new construction for a compromise? You might be able to live a little bit more comfortably and not have to work as hard. It will also give you an idea of how the 2 of you work together as a team (or not). You can save the Victorian house for later on

I differ to a great extent to Tricia's post...largely because of all the generalizations included in it.

I live in a community of pretty much all pre-1920 homes. We are a diverse community, and one border of our community is shared with a not so hot neighborhood in Chicago. We are 9 miles from downtown Chicago and Lake Michigan.

Point by point, here are my thoughts:
1.) Popularity ebbs & flows. During the 80s & 90s historic homes were very popular during the "country" decorating eras. Design aesthetics change over time. Right now, historic homes are a bit out of favor.
I totally disagree with this. Around us, and we're surrounded by other older communities, old homes have not gone out of favor.

2.) Historic homes have a more limited market. This tends to keep a tighter price range...not as much appreciation but also not as much downward pressure during economic cycles.
I agree that historic homes have a more limited market but I disagree about appreciation/pressure. Our location has always kept our home values in pretty good shape. Yes, they've slipped in the current cycle, but with $4.00+ gasoline, we're doing fairly well due to our close proximity to Chicago.

3.) It's VERY expensive to restore an historic home...often costing far more than resale value will support. Many people who purchased & renovated historic homes during the 80s & 90s are now unable to recover their costs.
The worst of the costs of restoring an older home are those related to undoing what previous owners have done (in our experience -we're on our 3rd old home). It is much less expensive to have the original feature and modify it to your needs than to undo a poorly done DIY project. I disagree that people who purchased and renovated old homes during the 80s and 90s are unable to recover their costs. Our 1996 $96000 purchase is now worth about $250,000, after having appreciated to the near $275,000 mark in 2005.

4.) You have to own a older home because you love it. It will be expensive to own. Repairs cost more & are often unforeseeable. They own you rather than the other way around.
Yes, you have to love an old home. We are currently in a 1918 bungalow and the monthly maintenance is not expensive. Our quarterly water bill runs between $70 and $100, while my in-laws near Dallas in a 1965 house, similar size, pay about $250 per quarter. We've been here for 3 years and the old unforseen expense we've had is 1 visit from a plumber to unclog pipes which we couldn't do ourselves - total cost $100.

5.) Utility costs are, generally, higher due to less insulation, construction methods, inefficient furnances, etc. In today's world, higher utility costs are a definite negative.
So, insulate. That's one of the least expensive updates to an old home. In addition, plaster is a much better insulator than drywall. Wood on windows is a better insulator than vinyl or metal. I doubt there are too many old homes nationwide that are still...

patser, THANK YOU for your well-reasoned post!

I can't understand any line of thinking that would discourage a would-be home buyer from choosing an old house. Their more reasonable size AlONE is a selling point!
Anything that discourages a new homeowner from considering a drywall palace is a good thing, in my opinion.

Another thing to keep in mind -- newer homes often are built in less desirable locations. The old homes in a town typically are closer to the center of town. New homes are in "fringe" areas. So when the housing market takes a downturn, those newer homes aren't so attractive, since the location is further from the city center or whatever.

To the OP - I don't know what is available in your area, but might I suggest a not so new but not so old house? Our previous house was from the 1920's and was lovingly maintained. All the mechanicals were newer than our present house, which was built in the 1940's.

I'd really recommend a 1940's house for a good compromise of old and new. We have a stone & brick exterior, charming details (arches, molding, etc.) in our 1943 colonial. But we also have drywall walls, central air, more closet space than our old house, more electrical outlets, a real eat-in kitchen, and 2.5 baths.
I was a sworn old house person and love Victorians. However, DH and I are also busy, work full time, and have 2 young children. We have no time and not enough money to maintain a really old house. Plus we figured out we don't want to be slaves to our home. Our 1940's colonial so far suits us great. It's not new enough to be anywhere near lacking charm, but it's not so old that we're slaving over it or sacrificing space or convenience.

I didn't read the whole thread, so maybe people have said these things.

You say no price drops, but what about CLOSED SALES? It is SALE PRICES, not asking prices, that determine market value.

If homes in your category have been selling at steady prices, then yes, they're holding their value. But if they haven't been selling at all, then what's going on is the sellers are refusing to recognize a drop in value.

Also, w/ the older homes, they'll be owned by individuals, who are more likely to be resistant to the idea of price drops. New construction is more likely to be a corporation or a builder, and they will be more realistic.

If it's true that homes like those you want are holding their value in this tough market, and despite huge drops in new-construction prices, doesn't that make those homes a GOOD buy? Because they will continue to hold their value?