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Desirable neighborhood > upcoming neighborhood. If this is your primary residence, think of it more as utility than investment. You’ll get more utility with more space and sending your kids to better schools.
Agree 100% with D1 (also SoCal)
I think there's two different factors that cut in opposite directions:
1) Neighborhood - an up and coming neighborhood will potentially have a greater rate of appreciation, but more risk. A desirable area will hold value but may not have as much upside
2) Condition of the home - you'll be often paying a premium for a move in ready reno or new build; there's more opportunity for value by updating an older home that other buyers are unwilling to do
I'd bet that the premium for a new build is not worth it here. 80s-90s is not even that old (I'm used to seeing 1920s-1950s in my area), so I'd personally go with the bigger lot
Brand new homes don’t appreciate much because the price includes a premium for it being brand new, unless the neighborhood blow up and become the hottest thing (big risk big reward). Older homes have better potential for steady appreciation unless the entire market crashes (small risk small reward). Given the quality issues with new builds, personally I would go for the older home.
Home builders just aren’t what they used to be. I have had brand new homes and older homes, I went with an older home with my most recent purchase while a lot of my friends purchased brand new homes. There are more issues with new builds, leaky roof or windows, electrical, plumbing or HVAC issues. One friend didn’t have a working AC unit for weeks when she moved in. I had to deal with water damage and leaky roof for 6 months with a brand new home before the builder sent a team to fix the roof. Between labor shortage, supply chain issues and the blooming housing market, builders’ goal is to build as many home as possible in the shortest time frame, quality suffers. Older homes (especially those in good neighborhoods) on the other hand were built in with quality in mind. Sure, the HVAC units are older but they aren’t the smallest possible units so won’t overheat in the hottest days (one older home I had came with an industrial HVAC unit, the maintenance guy was amazed.) Not saying older homes don’t have any issue, but you can typically spot them during tours, and plan accordingly or avoid altogether if the repair would be too much. And since I didn’t pay a premium for a new house, I have budget to address issues. Frankly most wear and tear can be addressed with just a fresh coat of paint.
Coach
The first one easy….especially based on what you’re worried about.
Subject Expert
Don’t worry about appreciation on your primary house. Either it goes up or it doesn’t. The other factors matter 1000 times more
If you update the older home over time that will add value too
Looks like option 1 is the winner
I am going to stretch with 1.5m , so want to take a correct decision. Which one is good in terms of appreciation. Old houses are not so desirable??
Location location location….option 1 is the right choice.
Idk, I’d lean toward option 2 especially if your kids are younger and school district doesn’t matter as much immediately. “Up and coming” isn’t exactly risky if they are building 7 figure homes there. Doesn’t sound like a recently gentrified slum for example. In Dallas there are differences like this and the newer emerging neighborhoods are not only appreciating well but school districts are improving as affluent families fill what used to be solidly middle class schools. (School performance is way more about household incomes of students and composition of student body than anything because affluent students will do well pretty much anywhere.)
I’s take a brand new home over a really old home. Financially it’s WAY less risky on a year to year basis as maintenance should be minimal versus the risk of “sorry, we need to dig up your 70 year old plumbing system and that’ll be $90k” type of issues. And yes I had that happen in a rental once that was older. Electrical work can be a bear and you can be limited in new renovations because once contractors touch something they may require the whole system to be brought up to code which can add tens of thousands. Not to mention modern closets and bathrooms are so much bigger and layouts better typically. Depends what you’re comparing against but quality matters and building materials and standards have come a long way.