Why are some new subdivisions experiencing price dropping and people rushing to move out? (for sale, real estate)
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With all the questions I have seen lately on certian subdivisions, why so many people moving and builders are "slashing" prices? I started to do some thinking and asked some realtors I know questions.
This is my take on things.
When areas started developing builders rush in to create their subdivisions. Sadly some neighborhoods will flourish and some will not.
For example,we built ours 9A & Baymeadows almost 6 years ago, friends of ours built in theirs about the same time off of Atlantic blvd. Both houses were about the same size and price.
Our friends sold their home last year because their neighborhood had gotten as they put it "kinda trashy", at the same time we were considering a relocation to Atlanta and were doing the research to put our home on the market.
They finally sold(many houses were for sale) and made $80k had we taken the relo and sold we would of made $158k.
This is based on purchase price vs sale price not what was owed. Even with the "market correction" that folks keep talking about we would still see a $130k profit while in our friends case should they of sold now they may of only made $60k.
I think the problem is with so many subdivisions still being built people have such a wide range of choices that if they sense any problems with a neighborhood they can choose elsewhere.
The sad things is existing homeowners trying to sell are competing with new homes still being built and the builders seeing so many resell homes lower their profits in order to sell their homes. It becomes a vicious circle, do the existing homeowners sell below what they owe in order to get out? Which will further lower the comps for future sales.
Or do they stay in their homes hoping that the problems go away and prices eventually go back up once the new construction has been completed.
I know if I was looking at a new subdivision and saw tons of resales along with builders lowering prices it would send up major "red flags". No matter how good of a deal it may appear to be is that the kind of "risk" I would want to take.
Again this is just my "take" on the situation.
With all the questions I have seen lately on certian subdivisions, why so many people moving and builders are "slashing" prices? I started to do some thinking and asked some realtors I know questions.
This is my take on things.
When areas started developing builders rush in to create their subdivisions. Sadly some neighborhoods will flourish and some will not.
For example,we built ours 9A & Baymeadows almost 6 years ago, friends of ours built in theirs about the same time off of Atlantic blvd. Both houses were about the same size and price.
Our friends sold their home last year because their neighborhood had gotten as they put it "kinda trashy", at the same time we were considering a relocation to Atlanta and were doing the research to put our home on the market.
They finally sold(many houses were for sale) and made $80k had we taken the relo and sold we would of made $158k.
This is based on purchase price vs sale price not what was owed. Even with the "market correction" that folks keep talking about we would still see a $130k profit while in our friends case should they of sold now they may of only made $60k.
I think the problem is with so many subdivisions still being built people have such a wide range of choices that if they sense any problems with a neighborhood they can choose elsewhere.
The sad things is existing homeowners trying to sell are competing with new homes still being built and the builders seeing so many resell homes lower their profits in order to sell their homes. It becomes a vicious circle, do the existing homeowners sell below what they owe in order to get out? Which will further lower the comps for future sales.
Or do they stay in their homes hoping that the problems go away and prices eventually go back up once the new construction has been completed.
I know if I was looking at a new subdivision and saw tons of resales along with builders lowering prices it would send up major "red flags". No matter how good of a deal it may appear to be is that the kind of "risk" I would want to take.
Again this is just my "take" on the situation.
I would be curious to know yours.
Karla
all your observations are legitimate, as you know the housing market is slow yet builders keep adding inventory, the result is weak prices, simple economics, more sellers than buyers = weak prices.
Regarding why some places are doing better than others, sometimes it's just luck, but usually it comes back to the foundation of all real estate values:
LOCATION
LOCATION
LOCATION
Your decision to buy in baymeadows was a good choice, the area is newly developed is close to many things and hasn't the problems associated with older areas, the person who bought on Atlantic, didn't do their homework, the area can be ok but there are places that are far from ok close by, and given a choice most people will avoid anything that even looks to be a sketchy area. a good development in a solid area with good schools, close to desirable amenities seems to always do better than a place built in an area that lacks certain qualities.
Dealing with buying and competing with a developer is tricky, that is why I have advised people to stay away from places like Nocatee because even if you stay there 10 years, you'll still be competing with a builder who has a 25 year schedule for build out.
I like to buy in older established areas, it takes this issue right out of the equation because they aren't building anything new where I bought.
I agree with Kort's reply... just to add a couple of things... I think it also depends on the quality, layout and amenities of the subdivision and also the quality of the builders that built homes in that subdivision. If a potential buyer doesn't like the looks or feel of a subdivison when they're driving into it, chances are they won't look at any homes there which reduces demand for that subdivision.
Since I know both of the neighborhoods you speak of, I'll add what other factors I see in that scenario:
1) DESIGN....the homes in your friend's development simply weren't designed as well....the facades were not as nice, big two-stories on top of each other (and I do mean "on top"...maybe 10 feet apart?), bad color choices, etc.
2) LOCATION....it's not the part of town, Atlantic Blvd has Queen's Harbour, The Woods, and countless others just down the road - this part of Atlantic Blvd is actually very nice - it's KERNAN Blvd that probably played a role here. Some people bought without knowing it was going to be expanded to 6 lanes with an overpass (overpass currently on hold...six lanes happening now). Unfortunately, this has affected the value of many neighborhoods that are dependent on Kernan Blvd for their exits.
3) NEIGHBORS...always the great unknown, and the ones in your friend's neighborhood don't care to keep their lawns and houses up - who knows why? And I imagine their HOA board doesn't really give a hoot about it either (or why would they have let it get in the shape it's in?).
As for the newest issue of too may homes for sale? Easy. 1) Investors. All those who got in late in the game are having to dump their houses on the market quick before their ARM rates reset. 2) Builders. They got greedy, pushed their profit margins too far, and now they have to rein them back in.
Your decision to buy in baymeadows was a good choice, the area is newly developed is close to many things and hasn't the problems associated with older areas, the person who bought on Atlantic, didn't do their homework, the area can be ok but there are places that are far from ok close by, and given a choice most people will avoid anything that even looks to be a sketchy area. a good development in a solid area with good schools, close to desirable amenities seems to always do better than a place built in an area that lacks certain qualities.
Kort,
I'm so happy you found the perfect place for you and your family. Ponte Vedra is lovely and it was a great location choice.
Ponte Vedra has it's competitors though. Take a drive down River Road in San Marco, or Alhambra Drive in Granada, Beauclerc Road in Beauclerc, etc....the estates on the river are stunning.
We can't all live in $10 million dollar mansions on the river though, so some of us have to slum it in $1 or $2 million dollars homes in communities like Queen's Harbour (oh well, at least we can keep the 50 foot yacht with the lower house payments ).
Yes, Queens Harbour on that same Atlantic Blvd you slammed above .
Atlantic Blvd is not "sketchy" at all. Not close to desireable amenities? Like the Intracoastal Waterway and the Saint John River that Queen's Harbour opens onto? Like the ocean that is 10 minutes away or downtown that is 20 minutes away? The Saint Johns Town Center 15 minutes away?
Atlantic Blvd is a very desireable location....it's just not the location for you, and that's okay, but I'd hate for someone reading your post to view it as a slummy area, because it's not.
And if anyone reading is looking for new construction in the area, there is some preconstruction pricing going on for townhomes being built on Atlantic & Hodges. Prices start in the low $400's .
I'm so happy you found the perfect place for you and your family. Ponte Vedra is lovely and it was a great location choice.
Ponte Vedra has it's competitors though. Take a drive down River Road in San Marco, or Alhambra Drive in Granada, Beauclerc Road in Beauclerc, etc....the estates on the river are stunning.
We can't all live in $10 million dollar mansions on the river though, so some of us have to slum it in $1 or $2 million dollars homes in communities like Queen's Harbour (oh well, at least we can keep the 50 foot yacht with the lower house payments ).
Yes, Queens Harbour on that same Atlantic Blvd you slammed above .
Atlantic Blvd is not "sketchy" at all. Not close to desireable amenities? Like the Intracoastal Waterway and the Saint John River that Queen's Harbour opens onto? Like the ocean that is 10 minutes away or downtown that is 20 minutes away? The Saint Johns Town Center 15 minutes away?
Atlantic Blvd is a very desireable location....it's just not the location for you, and that's okay, but I'd hate for someone reading your post to view it as a slummy area, because it's not.
And if anyone reading is looking for new construction in the area, there is some preconstruction pricing going on for townhomes being built on Atlantic & Hodges. Prices start in the low $400's .
sorry if I struck a nerve, you're right atlantic close by to where queens harbor is is not a bad area, but go a mile or 2 west and it changes and go near 9a and if that's not a skecthy area I don't know what is. maybe my parameters are too large but that's how I see it
sorry if I struck a nerve, you're right atlantic close by to where queens harbor is is not a bad area, but go a mile or 2 west and it changes and go near 9a and if that's not a skecthy area I don't know what is. maybe my parameters are too large but that's how I see it
Nobody lives there (Atlantic & 9A) - it's commercial.
The residential parts are very nice. Sure, there's plenty of modest housing in the area as well, but modest does not equate as sketchy.
This is a good thread. After reading the various comments it left me wondering if I've done my homework. We are strongly considering purchasing a home in the 210 area. The community is very nice and quite. BUT, the new home prices have me wavering back and forth. In John's Creek, new homes are being built and the asking prices are steadily dropping. The home we are looking to purchase is two years old and cost $70k more than the homes in John's Creek. This housing market is driving me bonkers.
This is a good thread. After reading the various comments it left me wondering if I've done my homework. We are strongly considering purchasing a home in the 210 area. The community is very nice and quite. BUT, the new home prices have me wavering back and forth. In John's Creek, new homes are being built and the asking prices are steadily dropping. The home we are looking to purchase is two years old and cost $70k more than the homes in John's Creek. This housing market is driving me bonkers.
Shelly
Different areas are feeling this to different extents and 210 being primarily all new builder development is getting hit pretty hard.
I have friends who built on 210 earlier this year only to find that by closing time their home had dropped by appx $40k. It has dropped further since and it may be a while longer before it stabilizes.
If you feel confident that you can ride it out in the case of more instability, and you really like the house/neighborhood/location, then I would say 'go for it'.
Different areas are feeling this to different extents and 210 being primarily all new builder development is getting hit pretty hard.
I have friends who built on 210 earlier this year only to find that by closing time their home had dropped by appx $40k. It has dropped further since and it may be a while longer before it stabilizes.
If you feel confident that you can ride it out in the case of more instability, and you really like the house/neighborhood/location, then I would say 'go for it'.
riveree broguht up some good points. another thing others have mentioned is how long will they keep building in the neighborhoods your considering. If there is any chance you might move before they have completed building you will be competing against the new homes.
I was looking at some new homes for a friend a couple weeks ago and one new neighborhood we looked at had a home listed that was closed on in Dec and was listed for sale 5 months later for $30k less than they paid.
With numbers like that I would consider a "completed" neighborhood. A little research should show the values over the last 12 to 18 months.
karla
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