I’m starting to see an interesting thing happen.
We all know that due to the lack of new construction for many years, we have a shortage of houses for sale.
Many people have said the way to solve this is to build our way out of it.
I am starting to see this happen.
In Nicholasville between $200k and $250k, 17 of the 30 houses for sale are new. In Lexington’s 40509 zip code, there are 104 houses for sale between $300k and $500k. 48 of them are new. That’s an incredible amount of houses for sale in the Hamburg part of Lexington. No wonder sales are slowing way down in that price range and I am seeing $10k price reductions left and right.
So what does this do to sales of existing houses?
Most people who buy a new house are only looking at new or newer houses. If you live in an older existing neighborhood, you are probably in good shape. Few buyers will seriously consider a 20+ year old house on a bigger lot with mature trees AND a brand new one on a smaller lot with trees shorter than they are. If you have a house that is less than about 10 years old in this price range, well, you may have a hard time competing with brand new houses.
Any time I have a buyer wanting a newer house in an area with a lot of new construction around them, I always tell them that it might be hard to sell and/or might not appreciate that much until the last new house has sold. The longer they plan to be there, the better. If they tell me they may only be there for 2-3 years, I tell them it might be wise to pick another house.
If you are buying in an area with lots of new homes around you, try to pick one that has some unique feature or has a super good lot. In a neighborhood where most homes aren’t too much different from each other, these small things are the difference between your house selling and always being a buyer’s second choice house.