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How is the new construction at Mueller affecting resale values?

Some residents at Mueller have been living here for over three years. The average time a Texan stays in the home they buy is 5.5 years, and as the neighborhood ages, more residents are thinking of selling their Mueller homes. The question I’m hearing is “How are prices for the latest construction affecting the Mueller resale market?” In this article I’ll look at the new Garden Homes, and I’ll talk about Mueller House Condominiums in a later post.

The Mueller home market has remained bouyant to date, with an average of two resale homes per month being listed on the Austin Multiple Listing System in 2010. I’m going to give my usual foreward here about price per square foot analysis – it’s a guide only and nothing to hang your ten gallon hat on. The average and median sold price per square foot for resale homes at the old airport last year are both $180/sqft.

I know what you’re saying, are the lower prices per square foot of the new Garden Homes going to drag down resale prices. If you look at the Garden Home details you see that the price per square foot appears to range from around $150-$175/sqft for a brand new home. There’s certainly a premium for buying a new home, customizing it and getting a 1-2-10 year warranty on it, so surely the average resale is going to come down.

Here are some factors I think are important:

  1. This is the starting price for a range of detached homes. All of the Garden Homes have irregular lots, many with builder premiums assessed. Most people who buy a new Garden Home will spend at least 3-5% customizing it at the design center in my experience. So the actual sales price will be higher than the “starting from” price quoted on the website. Anyone who has ever seen a car ad with “prices from” and gone to the dealer and realized that AC and automatic transmission are optional extras will get my drift.

  2. These are zero lot line homes, which means that they have a smaller yard than existing yard (detached) homes. There is something of a difference between a home with a 10’x15′ yard and one with only a 5 foot wide side yard. For some people that’s a benefit, for some a hinderance, but to any appraiser, I would say that lot size will make a difference in value. They also have no shared walls compared to the row homes, so are in many ways between the two housing styles.

  3. Housing style and finish accounts for something. Not necessarily just by looking at square footage, but if you consider the Garden Court homes, you’ll notice that they are 5 star green built in the Austin Energy Green Building program, compared to the Garden Homes three star rating. So even in homes with “Garden” in the title, you’re not comparing apples to apples.

  4. The median resale home size that yielded the dreaded median price per square foot was 2000sqft, and the median home size of the Garden Homes is (and this is a guess based on what I’ve seen so far) around 1600sqft. Theoretically smaller homes should be more expensive per square foot (there are fixed costs in building a house as well as variable costs), so this makes the newer homes even better value.

  5. The Garden Homes are predominantly built on different sized lots. This has meant the builder has been able to add additional square footage to many homes, which actually brings their price per square foot down.

On balance that the newer homes are very well priced, and this is by design – they represent denser living and a more accessible price point. I think that looking beyond a simple “price per square foot analysis” will show that these homes are very different to existing housing stock and can be valued differently. To take an extreme example, this allows a 3600 sqft home in the same neighborhood to sell for more than $250/sqft in 2010.

As always, when selling your home, you have to consider what other alternatives a buyer has. If you’re selling a 1700 sqft resale home at the same time that David Weekley happen to have a brand new one available for $315k and it meets the same needs as your homes, you should take this into account. Check out this post about competing with the Mueller builders for some thoughts.

Garreth Wilcock is a Realtor representing both buyers and sellers at his home development at Mueller Austin. Contact him for a no-obligation valuation of your home.

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