Neighborhood home value disparity

[braumeister]

My next door neighbor just put his house on the market for roughly 8X the value of mine. He'll probably get pretty close to it, too: it's a remarkable house.

Doesn't mean much to me, since I love my little house and would like to stay here forever, but I'm always amused at my odd neighborhood's wide range of home valuations.

I'm curious, though. For long term home value appreciation, is it better to have more or less homegeneity in home values? Put another way, is planned subdivision development better than random growth?

My ZIP code has a few little farms and a bit of light industry, but is mostly blue-collar suburban-residential. It's a 20-minute drive from the downtown area of a city with 1/3 million population, so I think I have the best possible situation.

 

[Katsmeow]

It is an interesting question. I think that all things being equal it is easier to value houses when houses nearby are very similar.

We live in a subdivision of custom homes, all different from each other. We have our house on the market and finding comps is sometimes challenging when this house might have a barn for several horses, that house has a pool and gazebo, and this other one has a guest house.

However, they are fairly similar in overall, umm, quality level of house.

We recently bought land with a 35 year old house on it. It is in an area that is very prized for location (great) and the fact it is unrestricted (very important for people with pets or who want to raise animals for FHA projects or have horses).

I was somewhat bemused that the street has mostly these 35 year old houses (we are going to tear down the one we bought and build new), some newer houses that was mostly 1 story mid-range type houses...but at the end of the street there are these huge, monster million dollar houses.

I think those really expensive houses probably don't have as a high a value as they would have it surrounded only by other houses of similar value. Of course, as someone planning to build a new mid-range house we are happy to see the million dollar houses.

All of that said, it can be very difficult for people to now sell high end houses if a lot of the value comes from the household finishing.

I was looking at comps the other day and saw a house that was originally listed a few years ago for almost a million. It was a nice house in a nice area. However, most houses of similar size would probably have then sold in the 500s somewhere.

Well, the house sat on the market a very long time. It sold recentlly for about $550k! And, by then was a short sale.

I looked at the pics of the house in the listing. The inside was gorgeous and had many high end finishes. I've priced a lot of stuff with us planning to build and I would guess it probably cost $750k to $800k to build it several years ago. While I'm not sure it was ever "worth" almost a million, I'm quite sure the owners had way more than $550k in it (hence the short sale). The reality is that in the current market (and our market isn't terrible compared to many places) buyers won't pay much for those high end features and they don't appraise either.

 

[braumeister]

Good points.
My neighbor's house is unique. Built 20 years ago by an inventor who made an absolute killing on one of his ideas, so price was no object for him. But a buyer for a 13,000 sf house in a ZIP code where the median price is under $150K will have to be another unique individual.

 

[Delawaredave5]

13,000 feet ? Got a link ? Wow

 

[Gumby]

Most of the houses in my neighborhood are of the same vintage (19th Cent.), and roughly the same size (about 2000 sqft) with the same sized lots (about 1/3 acre). Variations in value are generally attributable to who has the best maintained and most original house. Virtually everyone is within +/- 30% on value.

 

[braumeister]

13,000 feet ? Got a link ? Wow

No, I haven't learned who the realtor will be yet, but here's an aerial photo from the county auditor's website. The small house at lower right is the "guest house" that they use when have a party:

http://i153.photobucket.com/albums/s234/triplebarrel/home.png

 

[FANOFJESUS]

Thats funny the guest house is bigger than the homes in my area.