Here’s how to profit from the hype…
You can always tell when the good times are rolling in the Summit real estate market… new construction starts again.
Just like in past upturns, new developments are being “launched”. That means you may be allowed to overpay for real estate, but only if you really hurry.
Several new projects have been built and sold out in the past year or two. Next it’s going to be Maryland Creek Ranch where they say reservations will begin this year even before the legal objections about tripling the density are settled.
So here’s a quick synopsis of things to be aware of when you are considering buying new construction.
Who is the developer? Have they been here or are they just short timers attracted to a strong market?
How are they marketing? Is there a high-pressure call to action: buy now or miss out on pre-construction pricing? Developers sometimes hire itinerant marketing companies who use time-share sales techniques to pressure buyers into buying quickly without too many pesky questions. Some of these marketers have been to Summit County before and were responsible for a lot of buyer grief (see River Run at Keystone).
How long will build-out take? How many years will you have to deal with construction traffic and noise from 6 AM to 8 PM? There’s nothing like a gravel truck to drown out your TV or dinner conversation.
Does the developer have the resources to finish the project successfully? If not, your neighbors may be vacant foundations until the next developer (or the other owners) steps in to finish.
How long before the developer is no longer in charge of the homeowners association and turns it over to the owners?
History in Summit County has shown that the smartest move for buyers is to avoid the “launch” hype and buy existing property near the new stuff. Time after time buyers who did this early on benefited from the increased price per square foot that new construction causes all properties to gain.
And further, existing property holds the increased value when the launch crew leaves town for the next carnival. Values for new construction have often declined for the first five years or so.
Developers count on record high prices to justify building at all, so values for existing properties will not match those of new construction. But existing property values have usually increased dramatically when new construction came in at up to double the price per square foot of the older property (see Center Village at Copper and One Ski Hill Place).
Those who don’t need the newest and most expensive property can make money from new development… by avoiding it and investing in previously owned properties.