I recently talked with a mother who was concerned about her daughter purchasing a home in the Sacramento area. She wanted to get my perspective on the neighborhood to see if it was safe and generally okay, but more than that she was worried the price was too high for the area. Look at the graph below and let me know how you would feel about your son or daughter making a purchase at $280,000 in this neighborhood.
There is only one sale above $280,000, which makes it understandable why the mother was worried about her daughter purchasing at the top of the market. I am not saying that it is a mistake for the daughter to pull the trigger on this house, but before moving forward it’s worth thinking through some reasons why NOT to buy the most expensive house in the neighborhood.
10 reasons NOT to buy the most expensive house in the neighborhood:
- You won’t get the more immediate benefit of higher sales to boost your value.
- There may be a smaller market of buyers for your property, which could hurt in the resale market.
- Neighbors will laugh at how much you paid compared to how little they did. 🙂
- Is the house overpriced?
- If your house is the largest in size, do buyers really expect such a large house in the neighborhood? Is it overbuilt?
- There tends to be a larger pool of buyers in the middle-range, which helps these homes be more marketable.
- There won’t be anyone to compete with for the best house in the neighborhood. It’s no fun if you can’t at least try to “keep up with the Joneses.”
- If the market shifts after you purchase, you’ll be stuck at the top.
- Are the features of the home appealing to a wider audience or are they strictly something very personal that you prefer? (like a yard with a Star Wars theme and golden Yoda statue).
- What might you be able to afford in a better neighborhood at the same price?
Question: Any stories to share? What other reasons would you add to the list?