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New construction worth it?

I am interested in purchasing a new construction in northern nj. The dilemma I have is that with the house priced at $780,000 it is currently the most expensive house for sale in the town where the average home is around $400k-$550k. The surrounding houses in the neighborhood are around this price range. The town has a good school system, family friendly, and has a rail line within walking distance.

I am hesitant in purchasing the house because I am worried that it will not appreciate. Am I wrong in thinking this way? I do love the house, but I don't want to be in a position where if I ever need to sell, I will end up selling for less than what I paid. Is this house worth it?
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November 21 2012 - US
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Answers (5)

No, you're not wrong at all. I'm in California and had a similar experience with new construction (5) years ago in an area that was always known for "moderate" home prices. These new and very beatuiful custom homes were priced at (2) two million plus dollars. At that time, I could not imagine how they could possibly go up higher then that, in the area they were in.
Sadly, many buyers lost their homes due to the economy and these exact homes are selling for (1) one Million and below now.
I would be very careful with this.
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November 22 2012
You don't want the 780k house in the 500k neighborhood. You want vice versa. The other properties would have to appreciate tremendously and purchasing that home would help raise their expectations, because everyone will say "look this one just sold for 780K". They can use that house as a comparable. As long as they are not too far in contrast. So that means the 780k house would have to use the lower priced properties as comps. Be hesitant, the price may drop to blend with the community.
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November 22 2012
It's been my experience that, except in a solidly rising market, new homes lose "some" market value the moment you take title and move in.  It's no longer "new" like the car Vince referred to . That, coupled with lower average local resale prices, makes this tough to view as a good investment if value appreciation is that important to you.........luck...........Paul
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November 22 2012
I am hesitant in purchasing the house because I am worried that it will not appreciate. Am I wrong in thinking this way?

My experience is with new construction is like buying a new car, it is more likely to lose value %-wise as compared to non-new construction, everything being equal.

I do love the house, but I don't want to be in a position where if I ever need to sell, I will end up selling for less than what I paid. Is this house worth it?

Possibly, and if that is your concern I would go with the used home. If that issue financially is not an issue, then go for it.

And as mentioned by Susie, having the most expensive home in the area is not always the best idea.

I just appraised a home worth $1.1M in an area of homes worth $550K and the owner thought it was worth $2.0M due to size and acreage.

The principle is called 'overimprovement' . Its OK if you have enough money where its not an issue but not great if you dont.
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November 21 2012
I totally understand what you hesitate. I would like to give you some advice for buying house. You need to choose the location first and then neighborhood and decide the house as last thing. 

1) It is not a good idea to buy a most expensive house in neighborhood where the average is much lower than your house price. 
2) I don't like there is a rail line within walking distance. It is not good location because of noise and children's safety issue. Also, it is not good for resale value. 

Of course, you should think about resale value. 
I am a northern nj realtor who knows how to choose the town and location. 
I would be happy to help you to find your dream home. 

www.susienjrealtor.com


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November 21 2012
 
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