Returns on New vs. Previously Owned

Buying into a new-home community may seem riskier than purchasing a house in an established neighborhood but future appreciation in value depends upon many of the same factors.

Sales price increases in either type of housing are strongly tied to location, growth in the local housing market and the state of the overall economy, according to industry experts. Existing homes have been appreciating a little more than new homes but every once in awhile they're at the same level and sometimes the new home prices go up a little quicker.

The difference in appreciation of the two bears out in NAR's current research. For existing homes, NAR figures show the median price of existing homes went up 3 percent between 1994 and 1995; projections are that prices will increase 3.2 percent in 1996 and 2 percent in 1997.

For new homes, the association found that median prices went up 0. 8 percent in 1995 and are likely to increase another 0. 5 percent in 1996. For 1997, the group predicts 1.1 gain in median new-home prices.

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