This is absolutely the neighborhood we want to live in. The schools
are awesome and the neighbors really take care of their property.
We are immigrants from a different culture and would like to hear
some popular opinion.

You may have already answered your question: The most important thing
about a house is its location, because you can change anything else.

Some people will disagree with me on this, but I think that resale
value should be pretty low on your list of considerations when you're
looking for a house. If you find it interesting, there will be
someone else out there who will also find it interesting. I think
``difficult to sell'' is just a polite way of saying ``overpriced,''
which means that concerns about ability to resell may really be
disguised concerns about price.

Is the lack of a large formal dining area abutting the kitchen a
huge issue?

It depends on whether you like to use large formal dining areas.

How about the lack of fireplaces?

It depends on how badly you want a fireplace. It is a pain to add a
fireplace. It is much less of a pain to add a free-standing wood
stove, which will give more heat than a fireplace. There are even
some stoves designed so that they can burn with the door open for
those times that you want it to be more decorative than functional.

How about the lack of a garage? I view this as mostly a nuisance
but one that I am ready to put up with. I think this is currently
priced into the house but does the rate of price appreciation depend
on the presence/absence of a garage?

I expect it varies by neighborhood.

The fact that the house has been on the market for over a year with
progressive price reductions with no takers scares us a lot. Why is
this house not selling?

Good question, and one that's worth answering before you buy. Have
there been progressive reductions on other houses? Was it overpriced
to begin with?

--
Andrew Koenig