[quote=FlyerInHi]BG, new construction do not contribute to escalating prices. New houses hold down appreciation of old houses.[/quote]
I don’t think ALL newer-construction tracts are currently escalating in value, FIH. Just a few are, which are either in a particular location or have a particular footprint (~2700 – 3500 sf econobox or Mcmansion) usually situated on a small lot with HOA/MR).
Yes, the presence of newer construction DOES (indirectly) hold down values of adjacent older construction, purely due to increased choices for the buyer, which can be confusing because the older and newer listings are not “apples to apples” comparisons. (I covered this issue.) Just because today’s buyers have more choice doesn’t mean they are actually choosing correctly for their long-term needs.
I think most of them are just “complacent,” as Jazzman stated. They don’t want a house that is not completely “turnkey.” If they do decide to venture into an older area and find a listing that is “turnkey,” if all the surrounding homes don’t appear “turnkey-looking,” they don’t want to make an offer.
In the newer area, everything “appears” more turnkey from the street but many of the backyards are still dirt and in some tracts, plastic shades or sheets still hang in some or all of the windows in some houses a decade after being built. The other invisible issue in some of these tracts is there is a large percentage of homeowners delinquent on HOA dues and their taxes (primarily due to the large MR assessments added to their tax bills) which were never fully budgeted for by the homeowner.
The high delinquency rate for the HOAs of some newer home tracts doesn’t bode well for new buyers.
