Springfield Value: New vs. Old

Because of the deterioration of the Springfield neighborhood over many decades there have been many historic homes torn down for various reasons. This means that there have been/are numerous vacant lots in Springfield. Several builders have developed those lots over the past 10-15 years into infill, new construction housing complementing the historic styles. This has made new construction homes in the historic district a very real option for home buyers. As such, Springfield has seen basically two types of homebuyers over the past decade: those who want a historic home and those who move to Springfield for its urban vibe but prefer newer construction.

Recently, people have been asking me which I think will hold value in the future. While it is difficult to predict the future, looking back this is what I am seeing.

With the housing bubble, Springfield, like most neighborhoods in the US has seen a decline in value. Although all homes in Springfield have been impacted, over the past several years it seems that the new construction has taken the biggest decline, and I am seeing this in new buyer offers that are pushing value of new construction even further down.

Comparing value over the past decade in Springfield indicates that new construction value has declined about 42% whereas the renovated historic homes have declined about 20%. Why is this? Value always goes back to buyer demand. This indicates that buyers really will pay more for the craftmanship and detail work that simply cannot be replicated today at comparable prices.

So, if you are thinking of buying in Springfield and are comparing the newer construction with a historic property and are wondering which will hold its value over time, the past is a good indicator that the better investment is the historic home. You may have to make compromises, such as 2 full baths but no master bath, but you can't repicate the detail work that will help your home hold its value over time.

Housing Price Projections for 2012

Although home prices in the 3rd Quarter are up (email me for the 3rd quarter market update), industry analysts are predicting declines in 2012. If you have been considering putting your house on the market now maybe the best time to do it. Analysts at JP Morgan Chase are anticipating more foreclosures will hit the market in 2012 and that will drive prices down another 6%-7%, making 2012 the rock bottom year in housing prices.

In addition, the state of Florida is considering expediting the foreclosure process. Legislators are considering proposals that would divert noncontested foreclosures from the courts, allowing banks to handle them in much the same way they repossess cars. If such a measure became law, it would likely affect houses entering foreclosure after June 2012. This means falling prices could continue into 2013.