Bungalows: A Good Investment?
Winter 2003


In these days of economic uncertainty, many of us are reexamining our investment choices. If you're like most people, you've put a lot of money into your home. Is that money safe? Are bungalows holding their value? Is it time to buy, sell or sit tight?

We asked two real estate professionals, Dean Eichaker and Faith McGown, to give us their thoughts on the bungalow market. Both specialize in bungalows and other older houses.

Q: With the economy as it is, how is the house market in general and the bungalow market specifically?

McGown: Real estate is still doing well. I feel that real estate is carrying the economy right now. However, we're seeing a bigger inventory, so houses are staying on the market longer. That's not necessarily true for bungalows, though, especially if they're priced right. They're still in demand, though we're not seeing what we did a year or two ago, when you'd put it on the market and have five offers by the end of the day.
Eichaker: The housing market really hasn't suffered because of the economy. If anything, the housing market has become even stronger because it's just a more dependable way of investing money. The bungalow market has been increasing over the last few years as the inner-city market has been increasing. People are moving back into the city.

Q: Who's looking for bungalows?

McGown: It's a range of people, but it seems to be a lot of younger couples in their 20s and 30s. I occasionally have people coming in who are in their 40s or 50s, but that's pretty rare. Sometimes those in that range are looking for their kids. Singles, too, are looking for bungalows.
Eichaker: The majority of the people who are finding bungalows to fit their lifestyle are urban professionals--singles or couples--without children. That's not to say that people with children haven't been buying. It's just that the number of bungalows out there that can accommodate their needs is smaller. There are more of the two-bedroom variety than there are of the three-bedroom. There are also empty-nesters looking for a bungalow here in the cities. They'll have a lake cabin as their second home or a home out in one of the snowbird states.

Q: What characteristics are buyers looking for?

McGown: They like the original woodwork and hardwood floors, houses that have the original character. But they also want updated mechanicals--heating, newer roofs. Windows are a big thing, too. Original windows aren't a deal breaker, but they really like updated windows, but the more expensive ones that look like the originals.
Eichaker: What most people are looking for is the natural woodwork, the warm tones of the wood. The woodwork itself almost acts as a piece of furniture in the house. It's a nice compliment to whatever the walls are going to be painted. It also frames the view out the windows, whether it's across the yard or looking over a park. When you look at today's casement windows, they don't have the same picture frame quality that you find in a bungalow.

People expect hardwood floors. Unfortunately, you'd be surprised at what's happened to the floors in some bungalows.

Q: So people are looking for natural woodwork, as opposed to painted?

Eichaker: Very much so. Painted woodwork in the main rooms is a nail in the coffin for a 1920s house. It's common to have painted woodwork on the bedroom side of the house, though. But when you walk into the living room, it's those warm wood tones that really turn people on.

They also like the built-ins, and boy, if you can find something with the original light fixtures, that's great. They'll have those rewired before they'll go out and buy something from Menard's or The Home Depot.

Q: What are people expecting for garages?

Eichaker: Garages can be taken care of after the fact. I try to encourage people not to build two-car garages. They eat up a lot of yard, and I don't know that people really use them for more than just storage. Most of the bungalows I sell are in the 850- to 1,000-square-foot range. When you're talking about an 850-square-foot house, you don't typically need a two-car garage.

Q: What are people looking for in kitchens and bathrooms?

McGown: They like kitchens and baths to be updated to be more functional while still in keeping with the home. I had a client this summer who had completely updated her home. If you were in the bathroom or kitchen, you could not tell you were in a turn-of-the-century home. [Potential buyers] didn't want that.

Original kitchen cabinets are great, clawfoot tubs are great, but they want the dishwashers-they want the major appliances. They like the original cabinets, but if things have been changed around to give it more space, or a little better function, they like that. I think, though, that given the choice of a completely modern kitchen or an original kitchen, buyers would rather have the original kitchen so they can update it more sensitively. At least the buyers I'm working with.
Eichaker: People really like to see the original cabinetry in a kitchen. They like the birch cabinets with the turn-latch hardware. If you can get one with built-in breakfast nook furniture, people love that, too.

As far as bathrooms go, people are okay with a newer bathroom. They're willing to accept a newer bathroom as a convenience. Most people are happy with [retrofitted] glass block windows in bathrooms, but I try to discourage them. I know there's a convenience factor and a privacy issue, but you can put a nice textured glass into the double-hung window and not have that glass block look. It doesn't fit, and it also destroys the outside look.

Q: Are new buyers happy with the square footage they get, or do they want to expand their bungalow?

McGown: It depends on the buyer. My personal opinion is that they should try to maintain the architectural style, but I do see people who are looking to raise the roof to add a full second story or at least do more in the half-story. But you also see people who want to keep the house the way it is.
Eichaker: I find that the majority of people-and this is true of all home types--will have grandiose ideas of expanding. They'll talk about raising the roof to add a second story or bumping out a kitchen. It turns out, though, that they tend to be comfortable in the original space after a while. I always tell people to live in a space for awhile before they make expansion plans, because they might just find it suits their needs just fine.

Q: What is the price range bungalows are selling for these days?

McGown: It depends a lot on location. In the last month, I've sold bungalows ranging from $160,000 to $260,000. I've been working for about three months with the couple who bought the one for $160,000. They really wanted to stay under $150,000, but we just weren't able to. Under $150,000 are the real small ones, and we are still seeing multiple offers on them.

Eichaker: It's hard to find a decent bungalow that's in good condition under $200,000 now. It disheartens me to say that because one of the things that I love about bungalows is their practical, affordable aspect. But it's hard to find something under $200,000 that isn't in a more challenging neighborhood.

It's really a tight market in housing in general. You can still find them between $175,000 and $200,000, but they're going to need some work. One or more of the major mechanicals needs replacing or maybe some extensive cosmetic work is required.

Q: What would you find in the $100,000 to $150,000 range?

Eichaker: Practically nothing. Unless it's very, very small. I've sold those, too. Especially in the Longfellow neighborhood, you'll see little bungalows that don't even add up to 500 square feet. The bedrooms are about 8- by-7-feet square. But I've got clients who like that tiny house feel.

Houses that need some work are selling in the $175,000 to $200,000 range. The high end will be in the six hundreds; maybe in the eights if they have lake views. A recent large bungalow sold that had a wonderful lake view, and it had some great Craftsman features, but it also had some awful renovations off the back and on top. It had about 1,600 square feet and sold for $859,000.

Q: What neighborhoods are "hot" bungalow spots?

McGown: Houses tend to be less expensive in St. Paul than on the Minneapolis side of the river. Como is a desirable neighborhood. More people are considering Midway, too.

In Minneapolis, Nokomis is still hot. Prices have gone up in that area. Longfellow is gaining in popularity. I think the area that is coming up is north of Lake Street, closer to the river. That's an area that people haven't thought much about-both sides of Lake Street, really.

Eichaker: Definitely the Longfellow neighborhood. There wasn't a lot of turnover in past decades, and because of that, a lot of them haven't been touched. They've really been cared for.

When you get into the more affluent neighborhoods, that's when you can count on remodels, especially in the kitchens and baths. They've taken some of the original flair out of the house.

There's one over on Lake Harriet that was a wonderful, true Craftsman two-story. These people went in and did this Miami Vice thing to it. It's heinous. They've been trying to sell it for about a year now. I blame that on people having too much money; trying to fit the house to their needs rather than trying to fit their needs to what the house will allow.

There was a really nice bungalow in the Longfellow neighborhood, but they enclosed the open porch and put trailer-park sliding windows in it--small narrow ones. That hurt the curb appeal right from the start. Then they took the entry doorway out and a wall between the living room and a three-season sunroom, to increase the size of the living room. They kept removing walls, trying to make it one big, open space. It just didn't work. They should have moved.

Q: Any advice for people interested in buying?

McGown: I always recommend that people have a private home inspection to go over the mechanicals. Just about everything can be fixed, but it's important to know what you're getting yourself into.

It's common with older homes that at some point there has been water in the basement. It's something that buyers have to realize. It's a matter of working on the landscaping or gutters; figuring out why that was happening and doing something about it.
Eichaker: Don't be afraid of old mechanicals, old furnaces, old plumbing. That can be changed. If you have the original woodwork and the space to fit your needs, go for it. The other things can be replaced.

Q: Any advice for people selling a bungalow?

McGown: Do what you can to get the woodwork and hardwood floors in good condition. Also, it's the little things. Many times there are little things that we just learn to live with. Those are the kind of things that buyers notice. Doors that don't shut all the way or stick. Sometimes it helps to have somebody who doesn't know your house go through and see what isn't working quite right and then correct those things.
Eichaker: Try not to improve too much. Just play up the strengths of what original features remain in your bungalow. If you have beautiful woodwork around your windows, don't put heavy curtains on them. Expose it; show it off.

Also, you need to watch out for realtors who buy houses from people in a distressed situation, maybe someone who's going into a nursing home. Or maybe the sellers are relatives who live out of town and don't know the value of Aunt Sally's house.

Some realtors will say, "It'll take awhile for that to sell on the market, so why don't I just buy it from you." I ran into this with a house on Garfield recently. A family had been in a house since the 1950s. The surviving aunt had passed away, and the kids were spread around the country. A distant cousin lived here in the city, and the realtor he enlisted was trying to purchase the property from him for $119,000.

Someone gave my name to one of the owner's kids in Dallas-a referral. We ended up selling the house in two weeks for $225,000.