Too much development a bad thing?

Question

I just bought a house in a new subdivision because the area was well isolated and quite. I plan to rent the house after living in it for a little while. However, I've learned that this subdivision will expand with another 100 single family homes, and that adjacent to this subdivsion two more subdivision will be developed with about 125 and 200 more units, respectfully. The whole city is exanding similarly.

Besides the congestion, is this good for home value appreciation or will it lower it since when I try to sell or rent it, most of the other homes will be brand new and this will be a couple of years old.

Thanks...

newcomber.

Besides the congestion, is this good for home value appreciation or will it lower it since when I try to sell or rent it, most of the other homes will be brand new and this will be a couple of years old.

Thanks...

newcomber.

Marvin Valencourt · Answer

I'll second the notion the "used" vs new will be tough to get a top price out of either as a rental or a sale. I watched this happen in the last subdivision I live in, the "used" houses sat for quite a while (some vacant)and the builder was selling his like hotcakes. Once the builder moved on things leveled out some. If you plan to live in it long enough for the other subdivisions to be mostly completed you should be fine. If you decide to sell before that "critical mass" where there are more buyers than new homes, expect lower rents or buyers to expect to pay a lesser price.

Bryan Casteel · Answer

Very good question.  You raise a great point about trying to sell an existing home in an area where there are new homes being built.  This is a problem that many people run into when they buy one of the first homes in a new subdivision and then try to sell it before the subdivision is still being built.  It is very difficult to sell a "used" home in a market of new homes.

The resell prices of brand new homes in subdivisions that are still being built usually drops a significant amount until the subdivision is complete.  Buyers are considering a lived-in home versus a new one that they can have some choices on things like special features, colors and carpets.  Also the builders will usually offer some cool incentives to the buyers with rate buy-downs and free extras.  Once the subdivision is done, the prices of the "used" homes usually comes back up.