I understand that no one can predict a real estate market, but I am just wondering if a new home depriciates in value instantly similar to how a new car depreciates as soon as it's driven off of a lot (understandably not as high a percentage).
2007-10-28 15:53:44 · 5 answers · asked by krissy4543 4 in Business & Finance ➔ Renting & Real Estate
Thank you for the responses so far. Let me just try to explain myself further. I am well aware that a house generally appreciates in value and I have no fear that my house over time will not be worth more than I have purchase it for. I am also very well aware that a vehicle is not an investment, I was just trying to draw a comparison to help explain my question. Basically, I am wondering if there is an immediate depreciation simply because it is no longer "brand new", or whether that has no impact whatsoever on a house. I am well aware that any depreciation should quickly be regained. The question is just curiosity more than anything.
2007-10-28 16:47:59 · update #1
You can't realy put a number on it but if you buy a new home in a new development and the builder is still building new homes there, your home will for awhile in reality depreciate because when a potential buyers looks at yours and at the builders homes, they will be comparing "used" versus "brand new" so unless you had major upgrades done, your market value would be most likely lower than of the builder's homes.
2007-10-28 17:52:58 · answer #1 · answered by MK13 2 · 1⤊ 0⤋
Over time, real estate will appreciate in value. We're in a deflationary situation in some parts of the country right now so many properties will lose some value initially but that should not continue for too long -- maybe a year or two at worst before things turn around.
Assuming typical 3% - 5% annual growth it would normally take a couple of years to break even due to closing costs but after that you should be in the black again.
These are only averages. Your experience may vary significantly depending upon where you buy and how shrewd a negotiator you are.
One thing to watch out for, especially when prices are falling, is with new properties being sold in partly completed subdivisions. Builders typically have a significant amount of profit built in to the development and can often afford to slash prices significantly when a market tanks. That can leave early buyers stuck with homes that are now worth substantially less than they originally paid for them since new homes are being sold for significantly less.
2007-10-28 16:23:23 · answer #2 · answered by Bostonian In MO 7 · 2⤊ 0⤋
New Home Depreciation
2016-12-11 19:33:12 · answer #3 · answered by Anonymous · 0⤊ 0⤋
In the long run, a new home should appreciate in value. Unlike a car, a home is not a depreciating asset assuming you do the upkeep on it.
Remember, real estate includes not only the home but also the land. Also, a car is most definitely not an investment (although it is a depreciating asset unlike a home, which typically appreciates).
You are really comparing apples to oranges here.
2007-10-28 16:19:36 · answer #4 · answered by Matt M 2 · 0⤊ 0⤋
No, it does not. The long-term trend is that real estate goes up in value. Right now, however, residential real estate is in a slump.
2007-10-28 16:18:03 · answer #5 · answered by Anonymous · 0⤊ 0⤋