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Old 06-01-2010, 06:30 PM
 
336 posts, read 544,801 times
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Curious on your thoughts- when looking at houses we see some very nice houses in developments that came to a screeching halt when the market dropped off. Now there are very nice houses in half-finished neighborhoods. Who knows how long it will be until they are completed. We are a little leery of buying in these neighborhoods because of potential resale issues should it take years for these developments to be completed. Thoughts?
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Old 06-01-2010, 07:14 PM
 
3,428 posts, read 3,730,377 times
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Quote:
Originally Posted by mmhl View Post
Curious on your thoughts- when looking at houses we see some very nice houses in developments that came to a screeching halt when the market dropped off. Now there are very nice houses in half-finished neighborhoods. Who knows how long it will be until they are completed. We are a little leery of buying in these neighborhoods because of potential resale issues should it take years for these developments to be completed. Thoughts?
If they are less than 80% finished I would be very leery.

My friend rented a home in an upscale new development in st Augustine Florida. Thoses homes were going for $800k-2 million at peak. Now it's about 50% completed. Seems like 20-30% of the whims were investor purchased and all in foreclosure.

Someone thought they were getting a "steal" back in 2008 whe they were getting a foreclosure for 1.1 million on a him that was 1.6 million. Now that home is down to $900k and the homeowners can't sell and are renting it out since they had a job relocation.

So be very careful of these new developments.
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Old 06-01-2010, 07:19 PM
 
Location: Palm Beach County
1,309 posts, read 2,201,501 times
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It sounds like you know the answer already.
Every area is different but in parts of FL you can buy a 2-3 year old short sale for close to 100k (higher in luxury markets)less than what the new version of the same house is selling for. Now there are benefits to owning new, (warranty etc) but it's not worth that big of a gap.
Reselling in a neighborhood that isn't finished can be tough as well. Not to mention living in a neighborhood that may not be finished for years.
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Old 06-01-2010, 09:13 PM
 
10,154 posts, read 11,601,630 times
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Quote:
Originally Posted by skylinet View Post
It sounds like you know the answer already.
Every area is different but in parts of FL you can buy a 2-3 year old short sale for close to 100k (higher in luxury markets)less than what the new version of the same house is selling for. Now there are benefits to owning new, (warranty etc) but it's not worth that big of a gap.
Reselling in a neighborhood that isn't finished can be tough as well. Not to mention living in a neighborhood that may not be finished for years.
I totally agree, especially with the red highlighted statement above. However, it is not limited to short sales. We just signed a contract on a house near Fort Lauderdale. We looked at new construction and could not believe the difference in what you can get in a fairly new resale (ours is 5 years old) and a brand new house.

We paid the same for the resale as we would have paid for the new house but we figure that the house we bought has about $300K of extras in it that would not be part of the new construction. PLUS the neighborhood is established and we don't have to wonder if it will ever be finished.

We saw an absolutely lovely house in a development where the developer decided to stop developing the rest of the subdivision and sell off the rest of the lots. The homes that are there are absolutely lovely but the subdivision itself does not look nice. Plus-the home values have taken more of a beating than the general market. I feel terrible for the people who are trying to sell the house we saw. It is a lovely home, nicely decorated and only a year or two old but nobody wants to buy there because of how unfinished it looks there.
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Old 06-01-2010, 09:18 PM
 
Location: DFW - Coppell / Las Colinas
18,912 posts, read 17,602,087 times
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Builders are cutting some great deals, if you are buying a home is a good thing.

Builders are cutting some great deals, if you are selling a home is a bad thing. (It's tough to compete with a builder)

Also, make sure they are a reputable builder who won't start building $150k homes in a $300k subdivision just to turn lots into cash and have something to sell.
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Old 06-02-2010, 03:00 AM
Status: "I LOOOVE COLORS" (set 13 days ago)
 
30,304 posts, read 27,428,319 times
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we almost bought in an un-finished development... its now 3 years later and no pool ,no clubhouse..... the place is still only 1/3 sold....i would never buy anything ever not finished
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Old 06-02-2010, 12:22 PM
 
Location: Casa Grande, AZ (May 08)
1,155 posts, read 1,943,516 times
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Every person is different. I bought a model home from the builder new in 2008 as they were pulling out of an unfinished development.

I knew the risks involved - that the development may take years to be finished - and obviously that has proved to be true as it is now two years later and there is no indication even yet of new activity in my subdivision (though there is now building going on in nearby unfinished developments so it may be starting to change). I knew that I basically would be living in an older home amidst a bunch of newer ones someday and I would also have to deal with construction activity at some point.

The biggest downfall so far has been that our HOA lacks funds to keep up quite as well as I would like with some common area maintenance. Thankfully the owner (not the original builder) of the lots does pay SOME every month to help, so things arent catastrophic, but some things take longer to be taken care of than should be.

HOWEVER, there have been some positives. First, I got a VERY VERY nice home with many upgrades and complete landscaping for a great price. Next, I have no neighbors on one side, across the street, or behind me and havent for two years. This has allowed for much nicer views of the mountains etc around my neighborhood than I will have someday. I realize for some people that not having neighbors is a NEGATIVE (families with young children etc..), but for me its been nice and I will miss it when the building does finally start again.

As for value - yes, there is a chance that if I were to need to sell it may be harder than a fully established neighborhood, but on the other hand, since I paid less originally, I am not in as deep as others might be. If I am able to stay here (and fully intend to do so) for the longer term, when new houses are built, mine MAY or MAY NOT be worth as much as the new homes. On the one hand, as stated above, there is some value to the new home warranty, and newer construction in general (that is a main reason I bought new), BUT, some people like that I will have a well maintained, fully irrigated, mature landscape scheme already in place, and that has value. Also, although there are many variables, the COSTS of building new may be higher whenever my neighborhood starts to build again, so in relative terms I may be able to do ok compared to the overall cost of a new build (of course building costs may be less too - who knows?).

There is a risk that the eventual homes may not be of the same "style" or price range as the one Im in now - but not so likely for me as I am in a very middle range development. Also, the city plans call for certain types of homes and to change it significantly would at least require city review with input from residents, but yes, it still could happen.

In the end though for me it really came down to one thing - I bought my house to LIVE IN!!! Yes, there is an investment value to consider, but I wanted to own vs rent for intangible, non-financial reasons, and I was able to get a much nicer house for the money than I would have in other neighborhoods, so I bought it.
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Old 06-02-2010, 12:27 PM
 
Location: NJ
17,579 posts, read 21,275,560 times
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HOA is something to certainly look at if there is one. What happens to the few that own?
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Old 06-03-2010, 08:47 AM
 
Location: In an alternate universe according to some, AKA Aspergers
10,758 posts, read 11,956,390 times
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We just bought a forclosure in a sub that is not done and from the looks of it won't be anytime soon. About 2/3 of it seems to be done at this point. I wondered the same thing about the HOA and did some research/questioning. I guess the worst case if the HOA got into trouble would be a dissolution of the HOA and turning the common areas/streets over to the county. Since the CCR's state at a certain point of buildout the developer has to turn over control to the homeowners my first question was "how close are we?" I was informed that it's expected to be turned over next year. This is a large sub with multiple "neighborhoods" so I'm told the builder can adjust the subdivision removing enough of the unbuilt lots to satisfy the buildout % required for turnover. I'd never thought of this but it makes sense I guess, being the only one in control has it's benefits.

After living in 2 under construction subs and trying to resell prior to completion/turn over I've learned that if you buy that great deal in one then you better take into account a couple of things and think if it's really a great deal at all.

1.You better be paying a LOT less than what the builders are willing to sell for because they WILL cut your throat to sell theirs before yours. I had a builder agent specifically tell me that she would do whatever she had to so she sold inventory before we could sell ours.

2.If you don't accomplish the above then you'd better plan on sitting in it/renting it for quite a while or be able to take a hit if you try to leave.

3. The builder can (and most likely will) sell out remaining lots to whomever. We ran into this in our last unfinished sub where the builder sold out about 1/3 of the total lots (empty) to 3 other builders who built what I call "clap trap cr*p" that were not even close to the quality and size of the original builder. We got out before they built much and I'm betting it wasn't really great for existing home values.

4.I'd rather by a newer used house than a brand new one, especially after seeing some of the used houses that were 1-2 years old. Some of 'em had serious foundation flaws or really bad sheet rock/tape jobs, heck I saw one that was litterally cracking in half from slab to roof!
At least with a used/nearly new house it's most likely settled all it's going to and any major construction flaws should be apperant. With that new house if the builder goes belly up that warranty means zippo!

This market is a whole new ball game with ever changing rules and players so many of the old thoughts/rules no longer apply.
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Old 06-03-2010, 03:32 PM
 
Location: In the AC
972 posts, read 1,301,727 times
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Quote:
Originally Posted by mmhl View Post
Curious on your thoughts- when looking at houses we see some very nice houses in developments that came to a screeching halt when the market dropped off. Now there are very nice houses in half-finished neighborhoods. Who knows how long it will be until they are completed. We are a little leery of buying in these neighborhoods because of potential resale issues should it take years for these developments to be completed. Thoughts?
Is the deal so great you would be happy with this decision of nothing else is every built? Will you be happy if there are only tall weeds on all the empty lots?

Also, look into if the permanent roads are in yet and who is responsible for the streets. Where we live, the development needs to reach a certain level before the streets are turned over to the municipality. Until then, they could be your responsibility. Is the developer heavily invested in the area or just someone starting out? How confident are you in their ability to continue in the area?

We bought on a finished street in a very unfinished neighborhood and got a fantastic deal. But, we did a ton od research beforehand!
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