LOCATION & Appreciation: Distance from upcoming large projects?

9 Replies

I am curious, when it comes to real estate investing and appreciation, if you know about a big project (e.g. a large company coming to your town), how far away from that can you be and still obtain the appreciation benefits from being near it?


What would be the difference between the following ranges (especially the first 4):

3 miles vs 6 miles vs 10 miles vs 12 miles vs 15 miles vs 20 miles ?

Would there likely be a significant difference between 3 and 6?

or 6 and 12?

or 3 and 12?

Andrew, 

We have come across this a bit in one of the towns where we broker a lot of sales and my standard answer whenever I get the question is to ignore the upcoming project & focus on what the sales are in the neighborhood over the last 90 days.  My experience has been that it is very difficult to quantify price appreciation and the time necessary for it to affect the value of your property; in general, a big commercial development like a mall or a big supermarket will help but it is really difficult to get the timing right.  My suggestion is to base your short term decision for the purchase on what the market is today, unless you are planning on holding the property for an extended period of time.  I hope this helps!!! 

Andrew, I would say it depends.  Here are some examples:  (1) Town of Gardner, MA: Price Chopper added a location and anchors a shopping area around downtown & Super Wal Mart came in a little beyond the downtown area, those came in about 8 years back but it took about 5 years for property values to start appreciating dramatically, (2) Town of Athol, MA:  World's largest Hobby Lobby, Starbucks & an IMax along with a really nice Market Basket (regional supermarket), property value went up BUT it took a few years for a noticeable change and sales are still really choppy because the town itself is very remote.    Again, I think overall the advice I give to all of my clients is that they should make purchase decisions on the market as it is, getting a bump in value as a result of large scale development should be a bonus.  Last example I site is Springfield, MA, MGM Grand Casinos developed a nice property there but there has been no significant change in property value.   

Andrew, I am sorry - I did not answer the question directly; I think 5 years is a minimum time horizon to expect a run up in value.  By the time you look at 10 year time frames you are likely to have turned over a significant part of the residential real estate market (average homeowner stays in a property for 7 years).  I hope the examples I provided give you a good basis to evaluate my response.  I hope this helps, but there is no substitute for local expertise.  

@Moises R Cosme so are you suggesting buying property a few years after a new development is built? It seems like you're saying there is a lag of a few years so if I purchased a property during that early stage, I wouldnt necessarily miss out on the appreciation. 

Keaton, yes, based on what I have seen in our markets.  Everett, MA is also a reasonable example, Wynn Properties developed a beautiful casino in that suburb.  Pricing has not changed dramatically as a result of the new casino, the market itself had been appreciating for years as a result of its proximity to Boston but we have not seen dramatic acceleration as a result of the Wynn.  So, yes, I do not think you miss out by buying a year or so after the addition.  As always real estate is local so your market may differ - I gave the specific examples so that you could dig a little and verify my conclusions.  

I don't think 3 vs 6 or 9 miles makes a difference but if you are able to say walking distance vs driving distance from a shopping complex I see that as being a bigger factor.