Seattle

[findalittlehome]

Why do NEW houses sell for significantly more (20% and above), than Re-sales in the same small development, built by the same builder with the same floorplans and features? Is a house that is four years old really worth that much less than it’s identical counterpart that was just finished? I realize the appliances are now a few years old BUT 20% difference?

Thanks for the education! 

[2Ralph]

In part because people want new. In a development with new and "used" housing stock for sale are you going to buy a 4 year old "used" house when you can get the new one for the same price? No, the typical person will always buy the new place. For the owner of the "used" house to compete with new housing stock they will have to reduce the price. Thats one component of the price difference but alone does not account for a 20% difference. The other is simply the price for "new" is too high. Its kind of like buying a new car. How much it depreciates the moment you drive it off the lot is a function of how much you overpaid for it to begin with. Some people will pay $40K for a new car and others will pay $35K new for that same car. Would someone pay $35 for a "used" car if they could get it new for $35? No, but they might pay $34K if it had 500 miles on it. The person paying $40K simply over paid for it and hence the massive depreciation the moment they drive it off the lot. If you want the new place negotiate but be prepared to take a loss if you need to sell it based on the used market prices. 

[findalittlehome]

Thanks for your insight.

What then happens to the developement after the last new house is sold and the developer is gone?

Since all of the "used" sales have sold for so a lot less so far, does that set a new price range for all of the existing houses?

Thanks again.

[Purple]

After the developer is gone, other owners don't have to discount to compete with the developer, scarcity kicks in and all the houses start selling for the price of the last few new houses sold plus some margin. Appraisals for the higher prices are well supported since quite a few sales in the community would have been at the new home price.

[Venturion]

OP, are you comparing the net price? The recorded price is often higher for developers because they want people fooled into thinking it sold for more. When you factor in closing cost assistance and upgrades in the home, the net price is often far closer. The other big factor is if the builder is also pitching in to a subsidized interest rate with a partner lender.

[2Ralph]

I'd say the "used" prices are the "new" market prices. If I were buying and I was concerned about price and what my property is going to be worth in the future I'd focus on negotiating the best price I could with owners of existing homes. No sense in signing up for an instant loss. I'd probably negotiate hard with the developer also and ask them "Why should I pay 20% more for the same house?, that suggests prices are 20% overpriced so I think I'll buy a used home unless you can make buying new more attractive" Only if they would match the price of the "used" houses on the market would I buy new. For a variety of different reasons developers may have room to negotiate but you just never know by how much, if any. Even holding the developer as a constant each of their developments and the financial situation relating to that specific development will be different from one another. Good luck!

[xizor]

There are many reasons, some psychological and some real.

For one, the new homes come with a warranty. Second, the appliance, heating, hot water, plumbing,sewer line, electrical system,  etc. are are new, so no depreciation is required. Take at least $1,000 off the price of a"used"  home a year around Seattle for depreciation. 100 years old, at least $100,000 off the price, maybe more, unless renovated. And as noted above, builder's offer subsidies like upgrades or financing hidden in the price.

Then there is a psychological component. Think of the new house smell. There is no dirt or detritus from the former owner. Many resale's are filthy. And who wouldn't prefer taking a both where no one else has bathed before, or using the virgin toilet.  What is that worth?

[paydirt68]

,,,or using the virgin toilet.  What is that worth?

Seriously?  When I drop a deuce I don't really care if it's virgin porcelain or well seasoned.  I prefer models from not further than a decade back but that's for other reasons.

[Dune2]

Use Redfin search filters to see all homes sold in that neighborhood by that builder. When we bought, it varied by up to $50 000 in a 6 month time period. The filter was for roughly similar sized homes in the neighbourhood by the same builder. You really have to make sure the homes are equal in terms of lot location, lot size, interior features, bonuses ($10k credit, free appliances, etc).

That said, expect a brand new home to cost some 5-10% more than a "used" home just like cars are if not more.

[xizor]

Seriously! If you were to survey buyers you would find that most rather not buy a used toilet or bathtub. Would you buy a used toilet from a plumber for 95% of the cost of a new one?