Does New Construction Pricing Lift Existing Home Price?

[Ali Hashmi]

I recently purchased my first property for $540K.  It is 2,450 square feet and was built in 2008.

Across the street, the same builder just put 8 new homes on the market for $300K more ($845K). The houses are 200 square feet smaller than my home, but have a 2 car garage.  My home was built in 2008.

Once these new homes sell, will they significantly lift the value of my home?  

I should note there are only about 10-12 homes in this immediate  area, not including the new homes.  Only 3 homes have sold in the past 3 years.

 

[JD Martin]

New construction will definitely have an effect on your home's value. It can go either way. In your case, assuming they sell anywhere near that price, they're going to set a benchmark that your house can be appraised against. An appraisal would give you credit for the extra SF, deduct for the garage, and deduct for wear and tear/lifespan items (IE roofs). But if those properties sell for $300k more than yours, assuming no other defect where you live (ie they have a view of the harbor and you have a view of the sewer plant), you will have a big value bump. 

I've experienced the opposite effect. I was building a house and 3/4 of the way through a developer bought an entire farm across the street from me and started dropping houses on it like pancakes, ugly split levels built cheap as crap but with partial basements, which I did not have. They had me underpriced by a good shot and I took a bath when I sold.