Please help me to understand dallas house price difference between brand new houses and 5 years houses. (Plano: for sale, real estate)
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Please help me to understand dallas house price difference between brand new houses and 5 years houses.
Why are some new houses 100K more expensive than houses like 5 years old in some areas in Great Dallas area, same area and similar house size (below, the new even smaller)
Well, I am new to Dallas market and doing some research online before I enter this market. I am checking Richardson, found the new houses builders selling are much more expensive than 5 years old houses, if the builders want to raise DFW area house market by rising the new house prices? (When the buyer buy a brand new house below at 400k, he will not sell it at just 260k after 5 years generally).
The new homes you cited are both by Toll Brothers. Generally, they provide a higher level finish-out than the competition, and consistently price their homes ABOVE that of all other non-custom builders.
By comparison, one of the used homes is a Portrait home. This builder is now bankrupt. Make of that what you will.
Now, we can argue all day about whether or not a Toll Brothers build is worth the premium they charge. But the name of the home builder is one factor creating the price difference you cite.
Another factor is simple supply and demand. There aren't that many new builds in that area, so Toll Brothers can get away with their pricing.
It's also possible that the 5-year-old home owners had to cut their price down significantly to entice buyers into looking at "used" homes when there are brand-new homes in the exact same neighborhood. If price were equal (or within 10%) and the location was identical, almost 100% of buyers would choose the brand new home. This is the "catch 22" of new home areas. You need to know you're going to stay there long enough for the whole competing area to become 100% built out for home prices to stabilize long-term.
Well, I found this is a rule, all new houses in around plano area go from 250k, but old houses (like built in 1990s) start from 150k. similar size and location. I will say there are some reasons caused this difference?
Let's check here.
new:
6400 Fitzgerald , Plano, Texas 75074 (community: Trails of Glenwood, builder: Grand Homes), lowest model is "Grand Harrison" From $259,900, which is 2233 sq. ft, 3bed and 2 bath. http://www.realtor.com/property-deta...207?source=web
In many house markets I saw, new houses with new community means unknown ISD, unknown shopping areas, unknown neighborhood, far away from work location...old houses means mature neighorhood, known ISD, shopping, more convenient location... old houses are losing their house values but improving their location/land values, so old houses maybe at similar prices or even higher price than new houses. I do not understand in Dallas market, it looks this is not the case and want to know the reasons.
Last edited by BstYet2Be; 01-09-2012 at 10:09 AM..
In many house markets I saw, new houses with new community means unknown ISD, unknown shopping areas, unknown neighborhood, far away from work location...old houses means mature neighorhood, known ISD, shopping, more convenient location... old houses are losing their house values but improving their location/land values, so old houses maybe at similar prices or even higher price than new houses. I do not understand in Dallas market, it looks this is not the case and want to know the reasons.
Old houses in the suburbs are often times less desirable in the DFW area because "for just another 10-15 minute drive", buyers can get a brand new home for the same price or a bit more. They are willing to take a chance on the "unknown" for the new, particular many people relocating from very expensive places on the East/West coasts where a new home would never have been in reach, particularly a brnad new 4,000sf home for $200k or whatever.
You have to come into the city (south of LBJ-635) to really find the neighborhoods that follow the real estate rules you are trying to apply to the suburban market--> older, well-maintained homes in close-in desirable locations ARE gaining/maintaining their values becaus of the #1 real estate rule--- location, location, location.
The difference in location between old home in Plano and brand new home in Allen or North Plano doesn't carry the same value difference that the new home in North Plano (1 hour commute to downtown) vs old home in Lakewood or Kessler Park (5-10 minute commute to downtown) does.
You have to compare apples to apples. The new homes will tend to be priced a lot higher then what they will end up selling for many builders and that is the case with Toll B. and Grand.
One of the preowed home in Richardson you refer too is a short sale and the other one backs to Renner which is a very busy road. As Big G said, the finish out will be very different too.
You have to compare the ones that sold. Also, don't look at what CAD says the value is, many homeowners protest their assessed value every year.
There isn't much new construction in Plano or Richardson and many people would prefer to pay a premium for new. Homes are more energy efficient too.
Why are some new houses 100K more expensive than houses like 5 years old in some areas in Great Dallas area, same area and similar house size (below, the new even smaller)
Because the simple fact is, builders have drawn a line in the sand for what they are willing to sell their homes for in this economic climate. Prices have fallen drastically pretty much everywhere (and that does include the DFW metroplex, though not as bad as other states.)
Used homes are forced to compete with what the market will bear, and are a true reflection of pricing NOW. Builders are refusing to lower their prices to compete, and in some cases they simply can't lower their prices anymore. It can take years from start to finish to build a subdivision, and if they've already sold homes at a higher rate, it devalues the rest of the homes if they cut prices. They also had to buy the land at a higher rate than they could buy it now, and they need to make a profit, which also affects just how low they can go on pricing.
We looked at several new homes in Frisco and McKinney last year. On average, builders wanted 30-50k more for their homes than a comparable 4-5 year old home. We went to the bargaining table with one of them through our realtor to see if they could get a bit more in line with market pricing, and they refused. So, we bought a 5 yr old home that no one had ever lived in. The owner took a 80-90k loss on it, but whereas he was willing to do that to get rid of it, the builders are not.
Now, why there are no so many new builds in Plano, I believe there are enough lands here. I do not see many builders here, there are still strong market requests in Plano, why builders moved to Frisco or other places. City of Plano does not approve lands for new resident builds? or any other reason?
CAD value is $200k, owner asks for $300k? I do not think so, owner pay property tax every year (which is about 2.6% here!!). The whole community property value is in a range.
Quote:
Originally Posted by nsumner
You have to compare apples to apples. The new homes will tend to be priced a lot higher then what they will end up selling for many builders and that is the case with Toll B. and Grand.
One of the preowed home in Richardson you refer too is a short sale and the other one backs to Renner which is a very busy road. As Big G said, the finish out will be very different too.
You have to compare the ones that sold. Also, don't look at what CAD says the value is, many homeowners protest their assessed value every year.
There isn't much new construction in Plano or Richardson and many people would prefer to pay a premium for new. Homes are more energy efficient too.
We looked at several new homes in Frisco and McKinney last year. On average, builders wanted 30-50k more for their homes than a comparable 4-5 year old home. We went to the bargaining table with one of them through our realtor to see if they could get a bit more in line with market pricing, and they refused. So, we bought a 5 yr old home that no one had ever lived in. The owner took a 80-90k loss on it, but whereas he was willing to do that to get rid of it, the builders are not.
Very true here, owners who are upside down on their loans will take a loss to take the burden off their shoulders whereas builders will not.
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