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What’s New Construction Worth? Maybe A Lot

Posted on Tuesday, June 19, 2012

We have often said in this blog buyers severely discount properties in poor condition.  These buyers expect a discount so large they do not buy the property.  Money can sometimes be made by others at this point – buy the poorly conditioned property, fix it up and sell it. No news here. But what about the other direction? Do buyers put too large a premium on new construction – properties built recently in good shape? I think so.
We took a look at the price per square foot of single family homes sold in the last three months in Old Naples to compare those built in the last five years and those built earlier. The result? New construction demands a higher price. Of course, but how much? Before we get into this think about “price per square foot.” Believe it or not price-per-square-foot stays pretty stable across recently sold properties in the same area – sure quality and features matter but ON AVERAGE across many sold properties in the same neighborhood this figure does not move around too much. So when we find a big difference in this figure it tells us something. What did we find?
New construction homes sold at $654.70 per square foot while older construction sold for only $523.41 a square foot – a 25% premium. Wow.  When I think of real estate investment opportunities this one jumps out at me. I had been estimating spec home projects using recently sold properties as a price guide – standard real estate stuff. OOPS, I should be looking at this premium – this could be a favorable deal changer in a spec home project with its inherent new construction premium.
Well better late than never. Glad I picked up on this one. What do you think?


No legal, investment, or tax advice is being given in this Blog.  Consult with legal, financial and tax professionals before acting on any real estate transaction.  Actual real estate price and sales results are subject to market forces and are not completely predictable. The writings of this Blog are intended for the sole use of our clients.
Some of the data relating to real estate for sale on the website comes in part from the Broker reciprocity program of M.L.S. of Naples, Inc. The properties displayed here may not be all the properties available through the MLS reciprocity Program. This information is deemed reliable but is not guaranteed. Buyers and sellers are responsible for verifying all information about their purchase prior to closing.
Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan. Talk to Mark and Nan about life in Naples and why they chose this place to live full-time over all others and enjoy Naples real estate.
Mark Goebel, PA
REALTOR Coldwell Banker 5th Avenue South
Mobile: 239.595.3921
Facebook: NaplesBestAddresses
Twitter @mcgoebel
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