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There is a definite hierarchy of "value" when shopping for homes.
Your best value almost always is an older existing home in a desirable area. If those homes are being snapped up by buyers that have the means to bring them up-to-date you can often get "instant equity" from those around you fixing up their places too.
The next best value tends to be areas with smaller homes in an area of larger homes -- again those bigger homes sell for more than the one you bought and that lifts you up.
The worst value is buying a "high end" home in an area with significantly less costly homes nearby -- this is pretty much a guarantee that a) you will be carrying more of the burden for tax assessments / HOA costs b) hurt financially when other homes sell for less than your own c) at a disadvantage when folks assume you live in one of the more numerous less costly homes than the rarer high end homes...
I would not want to buy in a new construction neighborhood where the homes around me will cost substantially less than mine. Your value props up those properties, and their values drag yours down.
On the other hand if your buying with the intention of staying for a very long time and raising your kids in that house, then hey, 12-15 years down the road, it may all be a wash....
On a personal note, I think people really need to focus more on what they want from a house...pick the area first, then pick the property...once you know you will be happy long term in one place, then you can pick the right place...you should be buying a home first, the secondary consideration should be the investment side of it.
Although this is all in the same subdivision, what sort of separation is there between $350-ville and $250-ville? Is it one side of the street vs. the other? Or is it a definite separate area? That might make a difference.
We have a newer subdivision near us with "starter priced" homes but it looks like the vast majority of them were purchased by empty nesters.
Although this is all in the same subdivision, what sort of separation is there between $350-ville and $250-ville? Is it one side of the street vs. the other? Or is it a definite separate area? That might make a difference.
We have a newer subdivision near us with "starter priced" homes but it looks like the vast majority of them were purchased by empty nesters.
Excellent point.
Some very successful subdivisions are laid out for multiple price points.
We have seen many where the original builder/developer has given up, and sold out to a tract builder who comes in and builds at a much lower price point. When the homes are intermingled, the earlier buyers of higher priced properties get smacked.
But, we also have many PUDs, Planned Unit Developments, which were conceived to include multiple price points in multiple neighborhoods, even including townhomes, condos, and detached homes.
Although this is all in the same subdivision, what sort of separation is there between $350-ville and $250-ville? Is it one side of the street vs. the other? Or is it a definite separate area? That might make a difference.
We have a newer subdivision near us with "starter priced" homes but it looks like the vast majority of them were purchased by empty nesters.
Thank you everyone for the feedback.
The lower priced homes (which after doing more research will be starting at $220k with the high end being $250k) are basically 2 streets over from where our house would be located. They are all grouped together on 2 streets. These homes won't be visible from our lot and our house will be surrounded by other houses in the $350k price range.
The main difference between our house and the lower cost homes is the build quality and trim. What's standard on our house would be an upgrade on the other homes. The houses are similar sizes, but the other houses have 2x4 construction, laminate countertops, linoleum flooring, hollow core doors, etc. so it isn't that our home will be much larger, it's just a better build quality and nearly fully upgraded. I'm thinking this may be a plus as when you walk into our home vs the other homes, the quality is noticeable right away so there may be enough of a difference to maintain a distinction in values.
The neighborhood and the schools were the 2 main factors, and we love both. The financial aspect is more of a precaution as we do plan on living in this home until the kids are grown, but we don't want to make a poor financial decision at this point.
I would be more concerned about houses of similar size, but lower quality as opposed to bigger vs. smaller houses. You have to ask yourself how many buyers are going to figure that out when it comes time for resales.
I would be more concerned about houses of similar size, but lower quality as opposed to bigger vs. smaller houses. You have to ask yourself how many buyers are going to figure that out when it comes time for resales.
If the less expensive homes were significantly smaller / less likely to attract families -- like all two bedrooms with only a loft for occasional guests, or some similar "retiree" home that is often part of PUD for multi-generational living , then MAYBE you would not be taking such a huge risk. Instead the decision of the builder to use less costly "infrastructure" and finish elements is gonna REALLY put your at a HUGE competitive disadvantage. I would RUN from this situation! Anyone that buys in the section with the "top grade" construction and high end finishes is going to be taking a bath when it comes to resale. Heck even re-financing might be a no-go should you even want to dip into home equity -- appraisers will go by sq ft, bedroom count, number of baths and the cheap houses will be like an anchor around your neck...
That could be a risky situation, should you need to sell, until the values stabilize in the neighborhood. Someone I know bought under these circumstances, though they did not know it was a possibility at the time they bought their house. About a month after settlement, the builder decided to pull up stakes and not build any more semi-custom homes, liquidating the remaining lots (more than half the community) to a large production builder.
The production builder came in with a price point that was ~$200k below the existing semi-custom homes. The values of the semi-custom suffered greatly in the first few years, despite an attempt to differentiate sections by gateposts. Things have stabilized a bit, and the values have equalized, where the semi-custom homes attract a premium, but still not at the original $200k+ price difference.
Visually, the difference in that neighborhood is still stark, however, as the semi-custom homes were nestled into lots, with careful planning to save mature trees, framed by stone or brick mailboxes and gateposts, whereas the production builder clear cut the remaining lots, and the vegetation is not yet mature.
Smaller lots might make a huge difference in the appearance of the neighborhood you are considering; and, while your house would be situated on a nice lot, you could have negative equity in that situation, unless it is a huge planned development with starter, first move up, second move up, etc. in one continuous neighborhood, divided by section. If it is integrated by price point with separate sections, I would worry less than if it were a neighborhood that has a smaller market presence.
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All the world's a stage, and all the men and women merely players: they have their exits and their entrances; and one man in his time plays many parts, his acts being seven ages.
~William Shakespeare (As You Like It Act II, Scene VII)
Excellent point.
Some very successful subdivisions are laid out for multiple price points.
We have seen many where the original builder/developer has given up, and sold out to a tract builder who comes in and builds at a much lower price point. When the homes are intermingled, the earlier buyers of higher priced properties get smacked.
But, we also have many PUDs, Planned Unit Developments, which were conceived to include multiple price points in multiple neighborhoods, even including townhomes, condos, and detached homes.
So, more information is needed from the OP.
Standard Pacific's Salem Village in Apex is an example of this where they have 3 communities with multiple price points. Do you think buying in the higher end (Estates) n'hood will be adversely impacted by the lower priced points neighborhoods when it's time to resell... based on your market experience?
Standard Pacific's Salem Village in Apex is an example of this where they have 3 communities with multiple price points. Do you think buying in the higher end (Estates) n'hood will be adversely impacted by the lower priced points neighborhoods when it's time to resell... based on your market experience?
I wish the Estates had more price separation from the Preserve pricing. But, it seems that SPH has done a fair job of establishing layers.
It seems that the Estates are selling well, so maybe buyers are not too worried at this point. And Preserve buyers are loading homes up to where they are overlapping pricing with the Estates. That may be as big an error for those buyers if the Preserve does become established as a separate market point.
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Completely agree! This is WORST scenario!!!
