Yes, I’m going on a rant. You may not agree, but just hear me out. As a Realtor, I care about what happens to our home values, and I don’t like what’s Developing (pun intended), not one bit.
It seems like you can’t go anywhere without seeing another new home Development rising out of our clay filled pastures. Never mind that we don’t have the roads or shopping, number of schools or even enough Dollar Generals to support all those new homes, there’s a way bigger issue at stake.
These developers are overbuilding. You don’t have to do a multi million dollar study to know that. You know it because they are offering incentives to buyers to bring down their interest rates, and they are often cutting their new home prices. Your first reaction might be to think how good that is for the first time homebuyer, but keep in mind, those new homes are affecting the rate of existing home sales - and not in a good way. They also have a depressing effect on prices of existing homes.
You may not like thinking of your home as a depreciating asset, but without (and sometimes in spite of) consistent maintenance and periodic upgrading of kitchens, bathrooms, and the like, that is exactly what it is. As many lower budget existing developments age out, they lose ground very quickly compared with new construction. I see it all the time. Even when an existing home in the 20+ year area looks great on the outside, inside I often find tired kitchens and dated baths. Sure some homeowners update, but most just can’t. They’re too busy paying the mortgage, putting gas in the car and food on the table to drop 25 grand into a kitchen remodel, or 10 K to reno a bathroom. Those new homes start to look really attractive in comparison.
I tend to think of everything in relation to home values, so here’s the rub.
Existing home owners have an emotional attachment to their homes. They love them, so they mostly overvalue them, overlook their flaws, and are slow to accept lower price valuations. Not so with new home builders. To them, they’re just units. When they don’t sell fast enough, they slash the prices. No love, just a quick reduction of inventory that they are financing at higher and higher interest rates. As they cut new home prices, more pressure is put on existing home prices.
Think about that next time you see another new home development going up. Go to those zoning meetings and ask the officials why they allow overbuilding. Ask them why they put up with hedge funds building cheap builder grade rental housing, only to depreciate them for 7 years, and then dump those houses on the market, ultimately forcing our beloved home’s price lower.
Believe me, there’s more at stake here than just the amount of traffic on W. Georgia or Woodruff Rd.
Whew, it felt good to get that out!
Have a great weekend and an awesome upcoming week.
Sal Busacca, Realtor
