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There is a house being built in the overlay of my downtown area that is, no exaggeration, at least 10 times bigger than any of the small homes around it. On a golf course or in a gated private community, this house may fit right in; however, towering over the cute little cottages next to it, it just looks monstrous and out of place.
So, should you buy the best house in the neighborhood?
Property Values
For most of us, a house is probably the most significant investment we will have in our lives. The best investments are ones that leave room for improvement and will increase in value over time. When a house already has all of the bells and whistles and is nicer than anything around it, there is little room left for improvement.
When surrounded by larger, more expensive homes, a smaller home will likely see a large increase in value with minor improvements made, but the inverse is not the case. When surrounded by smaller, less expensive homes, a larger, more expensive one not only has little room for improvement; but may actually see a decline in value over time.
Difficulty Selling
Eventually, most of us sell our homes. While you may be initially enamored with a beautiful new house, it is easy to forget that one day, you may want or need to sell it. You may have difficulty selling your home if there is a great size or quality disparity to those surrounding it. If home buyers are looking in that area, chances are, they can only afford the smaller homes there. Or, if an individual has the money to spend on such a large, lavish house, why would they buy in an area surrounded by smaller homes, rather than in a community with similar homes, where the values are protected? Maybe you find a buyer who has enough money that they don’t care about the value: they just want THAT house in THAT location. That is the best-case scenario. But maybe your value takes a massive hit and you can’t sell for nearly the money that you put into it. Or, worst case scenario, you can’t find a buyer at all.
You can’t count on being a Catalyst
You might hope that by purchasing or building the nicest house in a neighborhood, there will soon be others like yours. This is a gamble with a lot of money on the line. Your gamble may pay off. With enough time, there may be small houses torn down and new large ones built in their place.
However, your gamble may epically fail. There is always the desire for smaller, more affordable homes. And without a Homeowners Association (see my blog post on the Pros and Cons of HOAs)
to protect the value of a community, you may be stuck with your beautiful, yet out-of-place, for much longer than you had intended.
Is this the Right House for You?
If a house has something that you can’t find anywhere else, whether its location or a specific, unique feature; it may make sense to buy one that is larger, nicer, or more expensive than the homes surrounding it. Just take into consideration how long you plan to live there and what you hope to get out of it when it comes time to sell. This is a perfect time to have a conversation with a local Real Estate Professional.
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