The housing market is currently in a mess following the aftereffects of the pandemic and recent interest rate hikes. As a result, people looking for a place to call home are exploring alternatives, and barndominiums have never been so attractive – they offer unique, affordable living spaces with enviable longevity. However, you may be concerned about whether they hold their value or not.
Do Barndominiums Hold Their Value?
Yes, barndominiums do hold their value if you wish to live in them or rent them out. This is because they’ve got a flexible design and are significantly cheaper to build and maintain. However, relative to traditional homes, they are more difficult to resell, especially if you’ve customized yours heavily.
For the most part, barndominiums are great investments. In this article, we’ll discuss why they hold their value and a few factors that would reduce your barndo’s resale value.
A barndominium is a barn-style steel structure repurposed to have a living space and a working area. Planned community developer Karl Nilsen created the term “barndominium” in 1989 when there was a demand for homes that could accommodate people and their beloved horses.
This initial intention has lived into the 21st century. Most barndominiums are located in rural areas. However, their magnetism is at an all-time high.
The return on your investment in a barndominium will depend on your intention for the property. However, whichever the case, barndominiums tend to maintain or increase in value over time. You’d be hard-pressed to find a barndominium going for less than its appraised value.
Here are six reasons barndominiums hold their value:
By carving out your perfect barndominium, you’re essentially working around a steel kit. And when combined with the steel roofing and siding, you’ll have a building that should be in good condition for the next 50 years (if the initial construction quality was good and you don’t skimp on maintaining it as the need arises, of course).
Another factor that extends barndos’ lifespan is their foundation. Typical houses are built on basement foundations, whereas barndominiums sit on slab foundations. This building plan will allow the steel posts to distribute the load evenly across the foundation, putting less strain on the weight of the foundation.
However, a natural concern that arises when using metal to build a barndominium is the risk of rust. But proper maintenance should prevent this problem. You can also install gutters that direct rainwater away from your barndo, reducing its moisture exposure.
On the topic of rain, the good news is that the elements must work hard before they shake your barndominium. Metal is non-combustible, so any damage to your barndo in a fire wouldn’t be too difficult to rectify.
Barndominiums also have resilient staying power in the face of hurricanes and tornadoes, withstanding winds blowing up to 150 mph (241 kph).
When it comes to forever homes and investments that will stick around way longer than you, it’s hard to beat barndominiums.
An owner’s profits from a property significantly hinge on how much it costs to build and maintain it. And not only are barndominiums cheaper to build than a standard house, but they also leave a minor dent in your bank account as far as repairs go.
You should also be grateful for the low maintenance of their steel structure. According to Barndominium Life, the metal siding and roofing can last for 40 to 70 years without any intervention on your end. This duration is even more impressive considering the short lifespan of the roofs and sides on most traditional houses on the market.
As a result, barndos are drawing in buyers who are looking for long-term homes or wish to rent them out later.
The age of a property is an essential factor in determining how many people in the market give it a second look. Investments typically mature over time, and this is also true for buildings. However, as far as homes are concerned, newer is better.
If a home is pushing 40, it is probably at a stage when repairs are imminent. Potential buyers generally frown upon listings that are already fixer-uppers during their sale, which is a problem facing many older standard homes in the market.
Luckily, barndominiums are the babies of the real estate scene, which is excellent news for their owners who wish to resell them.
Furthermore, it costs less to undertake barndo repairs, and the barndo might not even need that much of an overhaul. Even if your barndominium is one of the firsts from the early 90s, it would still be structurally sound today and for years to come.
Barndominiums also hold their value because their modernity makes them comply with contemporary building standards. Additionally, they are likely to contain features such as a laundry room and ENERGY STAR-certified doors, skylights, and windows. Buyers keen on purchasing a lasting property will pay handsomely for these amenities.
We are rapidly moving into an environmentally-conscious world. And as barndos incorporate foam insulation that reduces occupants’ energy consumption, it’s safe to say that these steel structures will retain and even increase in value over time.
Additionally, the windows on barndominiums are designed with energy saving in mind.
And if reducing their carbon footprint isn’t that important to a prospective buyer, low utility costs might change their mind. One barndominium owner in Plano, Texas, asserts that his electricity bill is 25-50% less since he abandoned living in a standard home.
Appraisers use similar listings in your area to determine what potential buyers would be willing to part with for your property. An equivalent property (a comp) would need to be similar to yours in style and characteristics.
So if a barndo has a similar number of beds and baths, is near your location, and has recently gone off the market, an appraiser would use its selling price to define what yours is worth.
However, barndos are among the rarest real estate properties in most markets, so you may encounter some trouble trying to put a price tag on your barndominium. Therefore, the appraiser would have to go for the next best thing in their search for a comp–a typical home with identical qualities.
As we saw earlier, it’s more expensive to construct a traditional home than to build a barndo with similar square footage and features. Consequently, if the appraiser puts a typical home price tag on your barndo, that would be good news. Standard homes sell for higher sums than barndominiums because of the higher construction costs.
However, it is increasingly difficult to benefit from this timely value boost. Barndominiums are becoming more ubiquitous by the day. And in rural real estate markets like those in the Midwest and Texas, you wouldn’t need to look far to find a comparable barndo.
The past two years have seen rent and mortgage rates balloon to unprecedented levels. Indeed, the high demand and low supply of affordable housing during the pandemic also contributed to exorbitant housing prices.
In times like these, people start considering cheap but unconventional options, and what’s more perfect than a barndominium? And an increase in barndominium search results and barndominium listings reflect this rising interest.
Like anything volatile, the housing market is likely to cool down as dramatically as it heated up. During these slow seasons, owners are wary about selling their barndos.
Additionally, barndominiums are less sought after than traditional houses, so they appreciate slower than their counterparts. Ownerly indicates that standard dwellings experience an annual appreciation rate of 3.8%; your barndo’s rate would be around 2-3%. Still, barndominiums are largely immune to falling in value. You’ll either see a net increase or a stagnation in their worth over time.
A couple of factors may get in the way of your barndominium maintaining the value it had at appraisal. The good thing is that these cons are all in the homeowner’s control. If you so wish, you can even make the negatives work for you as you seek to sell your barndominium.
A barndominium’s steel kit avails a blank slate as you seek to design a house after your own heart. However, if you intend to resell the home later, you may want to steer clear of extravagant customization.
Keeping features simple and easy to maintain will effectively cast a wider net for prospective renters and buyers. For example, painting a mural of your dog on the living room wall may not sit well with those in the housing market.
Minimal customization also applies as you design your kitchen, your choice of landscaping, and when designing the barndos working area.
It is certainly still important to prioritize your comfort in your barndominium. Making it “too you” would only be a problem if you eventually wish to rent the barndominium or flip it for a profit.
Most mortgage lenders in North America don’t consider barndominiums to be homes. Therefore, it proves challenging to secure a loan to build or buy one. This bottleneck ties back to limited comps in the barndo’s immediate vicinity.
However, you can visit many lenders who specialize in helping people circumvent this issue. And as barndominiums become more commonplace in the housing market, it will eventually be easier to get that extra boost to own one.
I’ve written a complete guide on the reasons that building a bardo might not be a great idea. I go into depth about barndominiums, including their relatively difficult permit requirements and their aesthetics.
Barndominiums are great options for buyers intent on renting or turning them into their homes. They hold their value due to their low construction and maintenance costs, durability, and energy efficiency.
Despite that, they appreciate slower than traditional homes, so they’re not the best properties for those keen on enriching their investment portfolios. And to ensure they perform at their best in the housing market, owners should keep personalizations at a minimum.