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How are new house values affected in an already established old neighborhood

I'm interested in a new construction price at $410k. The project has about 3 other new houses for sale, all priced above $350k. This project is in the middle of an established neighborhood with houses built in the 80s and 90s with prices in the mid $200s.
My concern is that these 4 houses are the only houses priced above $350k and are new while the others are in mid $200k. Does this affect the growth of property values of the house I'm interested in?

Here is the zillow map view with prices of the neighborhood I'm talking about (Only one new house is recorded yet. It's the one that's priced at 365k. As you can see, all the remaining old neighborhood houses are in mid $200k)

http://www.zillow.com/homes/for_sale/Sandy-UT/6932_rid/40.603277,-111.870176,40.602404,-111.871943_rect/18_zm/1_fr/
  • May 02 2014 - Sandy
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Answers (6)

While it is true that a neighborhood is a very important part of the equation when determining value and while it is also true that in many neighborhoods, the values are going up and may be the reason the newer homes are trying to garner a higher amount than the price of older homes in a stable neighborhood, you should still be speaking with a local real estate professional since value is determined by comparables recently sold , as well as condition, location and size. If you are going for a mortgage, you will need an appraisal done and the appraiser will be basing his determination for the bank (lender) partly on what has recently sold in the area that is comparable. If you are not going for a mortgage, that issue is not a concern as long as you view the purchase as an investment in a neighborhood with rising prices. 
  • December 25 2014
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It really depends upon the "direction" the neighborhood is going. In my area of Los Angeles, many neighborhoods are gentrifying and old neglected properties are being replaced by luxury buildings. This move increases property values. If the school districts are good and the city services are as well,  you are looking at an overall increased property value.
  • December 25 2014
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There are several factors that are going to go into the answer to this question, so I will be as thorough as I can. 

First, location is key in all real estate transactions. If you are not keeping that in mind when paying for a home than you need to re-evaluate. Zillow is inaccurate on their pricing most of the time. You should have comps pulled for the area to determine standard pricing.

Second, new home construction is only as good as the builder and their sub-contractors. How are you managing to make sure the materials used, the subs used, and the quality of construction are up to standards that you want. Have you fully vetted the builder online to see how previous clients have felt about them?

Third, new homes are costing between 90-100 per foot to build right now with these types of finishes. So you are getting a fair price if they are building it properly.

Finally, it is as equally important that you have representation when buying a new home as it is when purchasing or selling a home. If you are trying this process without a qualified realtors help, you are hurting only yourself. The builder already factors in commissions for their sales people and a cooperating agent. If you don't have your own agent, you are paying the builder's agent double to work for them. Their loyalty lies with the builder as it's their employer!

Hope these answers help.

  • May 02 2014
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Yes this will affect the growth of your properties value. The only reason I would buy a new build in an old neighborhood would be to live in a certain area that I loved and that I was planning on never moving again. If your looking for a new build just for the sake of a new build there are tons to look at right now.
  • May 02 2014
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I would never want to be the highest priced home in a neighborhood especially if many of the other homes are older. It is better to be the lowest priced home in an expensive area.

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  • May 02 2014
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Usually it is not good to be the highest priced house in the area. It can't be said that always holds true, but it is often the case. The good news is those prices are the zestimates here which are a joke and not correct.
  • May 02 2014
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