Can continued construction in my subdivision reduce the equity in my new home?

Asked by C. William, Memphis, TN Fri Oct 17, 2008

My Home is one years old and there are two empty lots in my subdivision yet to be completed. Can the continued building in the subdivision negatively affect the equity of my new home? My neighbors want the Builders to halt the construction because of the current market, but the empty lots impact the appearance of the neighborhood. What can we do?

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Michelle Dos…, , Germantown, TN
Mon Oct 20, 2008
Yes, new construction could have a temporary effect on your equity, but not long term. Personally, I would want the lots to be built up as soon as possible to keep the age of the new homes very close to the existing homes; this will help even out the comparables when the subdivision has been completed. Yes, empty lots are never as appealing as well-groomed lawns.

As for what you can do, encourage everyone to maintain their homes and lawns so that when the market does recover and the subdivision is completed, their homes will look as good if not better than the new construction. Think positively!
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Ronnie Dailey, , Cleveland, TN
Fri Oct 17, 2008
C. William,
Possibly, IF they SELL for substanially less per SQ. FT. than you paid but are fairly comparable in size and features, BUT this would apply only if you plan to sell soon or refinance, with a little time this would flatline, builders usually offer a 1yr. warranty - same with appliance manufactuers & the heat & air systems.
Ask you agent to keep you informed of the sold prices. Hope that helped
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Jo Shaner, Agent, Memphis, TN
Fri Oct 17, 2008
Hi C. Williams.

It would only be a negative if you want to sell your home right now. You would be competing with a newer home (new roof, new carpet, new hot water heater, etc) and probably builder/developer's incentives. With a new subdivision, you always want all construction to be completed. Then everyone is on a level playing field. Also, with vacant lots, it give a bad appearance (like a missing tooth in a wide smile).

I would first find out who owns the lots. Contact them and see what their plans are. If you swing it, buy the lot, keep up the maintenance and when the market turns........make you some money!! The market will turn, it always has - just keep your eyes peeled.

Jo Shaner
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