It was Sunday morning when I ventured up to Urbana (only 11 minutes without traffic from Germantown) - Of the 20 or so homes that I had previously previewed and rated only 6 had any potential.
What I discovered whilst previewing the properties in Urbana (Friday) was that they had an unusual percentage (over 95%) of distressed homes (Short sale/Foreclosure) on the market. The reason for this high percentage must be that the vast majority of these properties were built after 2003 and have little to no equity, in fact, they have substantial depreciation (over 30%).
What can we learn from this:
- New homes depreciate faster than resales in a buyer's market (Resale value is based on comparable resales that have sold - New homes have the builder profit built into the price)
- When purchasing a new home always keep in mind the potential resale value (This is relatively easy to calculate - square footage is the key)
- Location, Location, Location - Urbana is a really nice area to live in, however, it requires additional commute time
- The combination of a newer area with builders still building and a depreciating market, resale prices are going to drop faster. The builder has to remain competitive and usually have deeper pockets than the regular homeowner. The builder is going to offer incentives that the regular homeowner can't or is just not able to.
So should I buy in Urbana you ask? The answer is Yes. There are some really good valued homes that will by the next market be quite desirable. As always, remember to buy quality, location and stay well within your affordablity zone.
P.S. There are other areas that are being impacted in a similar way i.e. Clarksburg and Kingsview
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