Pricing the Home Easier, if You Understand The Neighborhood Life Cycle


I recently sold a 2,780 sq. ft. home in an older neighborhood of mostly smaller homes built in the 1950’s and 1960’s.  The neighborhood had experienced many foreclosures in the great recession and deferred maintenance was still visible years after prices went up again. This listing would be a tough sell because the house did not conform to the average size in the neighborhood. Pricing the home was difficult as their were not many similar homes in the neighborhood.


The home was twice as big as average due to an addition and garage conversion into a legal accessory dwelling unit.

Typically, such “over improvements” are not well rewarded by the market.  The ‘principle of regression’ says the better homes in a neighborhood will be ‘dragged down’ in value, if most homes are lesser.

What kind of buyer wants an ‘elephant house’ in a still-recovering beaten-down neighborhood? The answer was in understanding the ‘real estate life cycle.’Years ago, kids growing up in the then-new subdivision started leaving.  Parents followed.The neighborhood eventually became a mix of permitted duplexes, rentals, and deferred maintenance. Over time, values fell enough to attract another round of young home owners, and investors.  In other words, the neighborhood came full circle.


Today,  most homes still have only a one car garage, or no garage, with streets that lack curbs, and not too many street lights, either.  Yet, since early 2013,  young people and investors have been sinking funds into acquiring properties and improving them.  Among the overall improvements was also a new charter school, and similar build-outs, inching down the main transportation corridor toward the neighborhood.


A young couple with an MBA degree, and seven months pregnant, showed up to buy the house.  They were attracted by the income and investment potential.
The unusually modular layout with its 500 square foot accessory unit allowed for are-configure the interior space at almost no cost so that renters could cover the mortgage living in one part of the property, while the new owners only had to pay taxes and insurance living in the other part.


A Craigslist ad describing this value proposition, coupled with a targeted flyer to younger agents with their generally younger buyers, did the trick. The key was understanding the neighborhood life cycle, and what demographic would most likely to respond.




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