Sears & Roebuck Kit Home

[Austin]

Jeff: I just went to that Sears Catalog site and browsed the houses and noticed something very interesting. If you start off in 1908, the average price was around $750. As you progress in time the design details increase and up until 1928 the price roughly triples. Then in the 1930’s Sears stops quoting price and starts giving monthly payments in the $50 to $65 range. An obvious rouse to cover up the hyperinflation of the roaring twenties. Then as you progress through the 30’s the design detail diminishes and the homes become more utilitarian and they don’t give a price or payments. These houses are a mirror of the economic cycle of the times. It is like the clock is going backwards. We start off with good construction details and gradually improve until the price triples, then we start a downward slide masked by creative financing and finally end up with no details at all and a project look about the dwellings.
When I was experimenting with regression analysis I found out that the local market was divided into five time periods I called eras. In my database each era has a number from 1 to 5 so I can sort out the different eras when selecting comps. Era 1 is from 1929 and down. Then from 1929 to 1945 is era 2, which is very low-end low quality construction. Then era 3 is from 1945 to 1960, which is more modern and better quality and design. Then era 4 is 1960 to the early 1990’s mostly ranchers. Era 5 began with the boom of the 1990’s with a leap forward into huge two story very high quality upscale dwellings that correspond to the mid 1920’s economic boom. Again, each era represents an economic cycle of this country. Another reason AVM won't work but regression will if you know what you are doing.
In this area, in the 1920’s prosperous farmers built large two story frame Victorian dwellings of very good quality construction and detail. One builder built most of them and he worked for $1 per day.
About two miles from the farm I live on is a large farm with a beautiful panoramic view. A lawyer examined the title when it was sold about 25 years ago. He told me that the farm sold around 1900 for $1,200, then it sold around 1915 for $4,500. Sold again in the early 1920’s for around $20,000, and sold around 1928 for $35,000. Then it sold again in the mid 30’s for $3,500. The cycle began again and the purchase price in the mid 70’s was $35,000. Now it is worth around $250,000. Does anybody notice a pattern here? And in closing, let me remind everybody that the real estate appraisal profession was born in 1932, for the sold purpose of figuring out what the hell went wrong so we could keep it from happening again. Round and round she goes and where she stops nobody knows!

 

[Pamela Crowley (Florida)]

Austin,

Very profound statistics. It's so unfortunate that we appear to only learn from our own mistakes and maybe the last couple of generations. Once the people that lived through the Depression of the 30s die off, there is no one left to warn us and we go on our merry way to the same destructive scenarios.


But... but.... but.... It's 'different' now.

 

[Charlotte Dixon]

Austin,
Yes, very interesting pattern of cycles here, and I'm sure many of us experienced these personally. My husband and I bought a 160 parcel of clear land in 1960 for $42,000, resold it in 1978 for $210,000. 8 yrs. later it sold for $220,000. Just recently it sold for $375,000. Wish we kept that real estate!

 

[Charlotte Dixon]

Jeff....After looking at your site, and my site, I've concluded that almost everything in our town is a Sears home..... :lol:

 

[jtrotta]

To All;
The scenerio I gave regarding the "barter system" Chicago- during the 20' & 30's has already repeated itself during the late *80's & early 90's, as I had used a great deal of that information to create sales for builders during that period; of course that was not the end all, had to come up with a whole scenerio to move properties, especially the builders stuff during that period. Yep, it comes around all the time, but you need someone who knows about the system to use it.

Austin, doesn't the scenerio you described (history) repeat itself many times; 20-30; 30-50; 50-60 etc., but you also have to look at earnings during that period; interest rates; and economic growth. All were & are cause for home prices rising. The "Flexing" is in part, a natural happening thru various periods of time, caused by growing periods or prior to growth periods.

 

[Austin]

Jtrotta: I don’t think history repeats itself; we are just seeing the natural laws of economics playing out in different scenarios. The various economic cycles are driven by leaps in technology. . In the 19th century it was the railroad and before that the canal system. In the early part of this century it was the automobile and airplane. Then WWII started the next cycle and the baby boom generation carried us up to the 90’s on the volume of numbers people. From that time on it was the computer revolution. I read in Economist magazine that during the 90’s, 40% of GDP was attributable to the computer/software revolution. The Roman Empire collapsed when the Romans ran out of nations to conquer and exploit. They kept their system working by stealing from outside. Our system is predicated on a continual growth rate into the distant future. This projection is self-defeating because the cost of our large government in taxes and regulations is driving the move for a global economy thwarting any hope of these optimistic growth projections being realized. The information age that we are heading into has some interesting implications, that being it is not being driven by manufactured products. We are becoming a nation of information and data crunchers. This means a few producers of the information product and many consumers of the product. The problem is, where are the consumers going to get the money to keep the system circulating and with our failed public education system, who is going to come up with the new technologies? If we go for a long period with no new technology, things could get interesting. Like any pyramid scheme, the last person holding the ticket, or stock certificate, is the loser. As the Liberal economics college professors use to tell us: “Don’t worry about it, we will all be dead by them.”