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Prices coming down on suburban 'dream castles'

March 07, 2009

They're spread across suburbia in every state of the union. They're whopper-sized houses - typically with 4,500 to 6,000 square feet of living space - built in the last 10 years. Many in the real estate field call them "dream castles."

"Families with young children typically love dream castles for all they offer - loads of bedrooms, bathrooms, walk-in closets, a game room for the kids and a country kitchen where everyone can hang out," says Abraham Tieh, a former president of the National Association of Exclusive Buyer Agents (www.naeba.org).

Of course, an increasing number of people are losing their suburban castles to foreclosure. And with mounting inventory on the market in many neighborhoods, the banks that now own these properties are marking them down to bargain levels, says Tieh, who contends now could be an opportune time to acquire one for a rock-bottom price, as long as you make an informed choice.

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Here are suggestions for those currently considering this option:

o Exercise caution in the selection of a neighborhood.

James Hughes, a housing expert and dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, is bullish about prospects for an eventual rebound in suburban property values. However, he says this recovery will come soonest in areas long popular with families who have school-age children, a large segment of the suburban home-buying market.

Those seeking to buy a suburban dream castle may find an excellent buy in a foreclosed property. But, as Hughes says, it could be a perilous choice to buy a home in an area plagued with a multitude of foreclosures - a clear signal of deep economic difficulties.

"You may have to wait a long time before all the excess inventory is sold off and prices bounce back," he says.

o Avoid a distant suburb, if possible.

For years, many families in pursuit of very large homes have been willing to accept lengthy commutes so they could enjoy the benefits of a spacious house and yard, because square-foot prices tend to be lowest in distant suburbs. The idea, real estate agents say, is to "drive until you qualify."

But, as Hughes notes, recent volatility in gas prices has caused many to question the viability of living in an outer suburb, no matter that energy costs have recently eased.

"People finally realize they can no longer count on the availability of cheap gas. They know that at any time, a crisis in the Middle East or elsewhere could suddenly push prices up again," he says.

Perhaps you're willing to endure a long commute. Still, Hughes advises against purchasing a dream castle that's more than a 30-minute drive from an employment center where the economy is relatively steadfast. Those who choose a closer-in suburb stand a better chance of selling well when it's their turn to move.

o Choose a neighborhood with a superb elementary school.

Much has been made of the power of strong neighborhood schools to hold up real estate values over the long run. Hughes endorses this view and says a top-rated elementary school is especially important.

How can you be sure the home you purchase will be served by a high-performing elementary school? Real estate agents are reluctant to characterize schools, but they can quickly gather reams of statistics, such as test scores, that will let you compare one school to another. Or you can find the data by going to the local school system's Web site.

Alternatively, for a fee you can purchase in-depth reports on local schools through a service such as SchoolMatch, a research firm that collects and analyzes information on public schools (www.schoolmatch.com).

o Look for a solidly built house.

In a market where home buyers have tremendous leverage, there's no reason to accept second-class construction when you choose your dream castle. But how can you identify subdivisions where the homebuilders took extra care? Tieh encourages you to closely examine the interior detailing in a house as one indication of its construction quality.

"You can't see behind the walls of a house that's already built. However, you can see if the cabinetry and wood trim were well-finished. Also you can judge whether the builder used long-lasting roofing materials or the cheapest available shingles," he says.

To further assess construction quality, Tieh recommends you go door-to-door in any subdivision you're considering and ask residents if there have been problems with the builder or if major construction flaws have surfaced.

While you're at it, he says you should survey the neighbors on the energy efficiency of their homes. For instance, ask them how much they must typically pay monthly for gas and electric services and whether their homes were outfitted with air-tight, energy-efficient windows.

o Focus on your lifestyle reasons for seeking a dream castle.

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