Myth: New construction will raise/lower property values, and that's bad
September 29, 2021
” For most people, a house is the biggest purchase they’ll make in their lifetime. You might have heard stories of housing prices shooting through the roof near new construction.
If you are a homeowner and hear about a change coming to your neighborhood, you might wonder: “What will this do to my property values?” For most people, a house is the biggest purchase they’ll make in their lifetime. You might have heard stories of housing prices shooting through the roof near new construction. Or, you have heard stories about property values dropping like a rock. Let’s talk about when and why we might expect property values to go up or down.
What goes into the price of your house? A lot, actually! It’s the price of the building, and the price of the land it sits on, and the value of what’s around your house. Schools, safe roads and good sidewalks, restaurants and grocery stores, parks, lots of job options, and everything else!
Land in a city is expensive, and generally, the bigger a city is, the more valuable the land is. That's because there are more people sharing experiences and creating opportunities. Land is usually most expensive near the center of a city, because it's closer to more opportunities. What does that mean for your property values?
If a city is growing, that means property values will go up because of new construction near you and because of new construction miles and miles away from you.
That also means you will almost always pay a different price for the exact same house in a different part of a city.
When would new construction lower property values? Sometimes, changing the zoning rules can allow for new buildings that are bigger and more intrusive but don’t make more housing for people, or it's drastically out of scale with the rest of the neighborhood. An annoying business can also lower property values – no one wants to live next to a factory, after all.
Your neighborhood will change as the city changes. Letting some buildings change in your neighborhood as the city changes is the best way to keep housing affordable and property values up and small businesses open – all elements of your neighborhood’s character.
Thoughtful, consistent rules for how a city evolves - everywhere - is the best way to keep a city fair and functional and predictable for everyone.
