This is a bit of a noob question and I think I already know the answer, but I'm curious to see what others think.
With how fast properties around the U.S. have appreciated over the past few years, I'm wondering if there's a difference between the amount of appreciation that older properties have seen (by "old", I mean properties built anytime before the 1970s) as compared to newer properties (by "new", I mean properties build anytime after the 1970s).
I realize there are a lot of variables to this question, but still, I'm wondering what others have seen. Whether you invest in older properties, newer properties, or both, has there been any noticeable difference between the amount of appreciation you've seen among each?
@mattpayne Great question, in my opinion I think it’s all relevant to the economy and the area the home is in. Two things we no one can control or predict.
@mattpayne when I sold off a couple of my duplexes in 2019, they had more than tripled in value since I bought them a few years earlier. They were both very old. I think one of them was built in the late 1800s and the other one was built in the 1920s.
Granted, I didn't have any properties that were built after the 1970s, so I don't really have a good comparison from the same market, but just looking at these two by themselves, they didn't seem too hurt by the fact that they were old.
I think it's also a function of how cheap you bought them for in the first place. Regardless of where the market is at, you can always find motivated sellers who will sell for WAY cheaper than market value... and if that's what you're able to do, the things will technically "appreciate" a lot overnight, simply because you got a bunch of free equity at the closing table.
Buying a new property v/s old one? Nice question. I think both things have their own pros and cons like:
Prons of buying a new property:
There is minimal maintenance required on new properties.
Government incentives for first home buyers can reduce the upfront funds that you need to come up with.
Newer homes are built with better efficiency.
You will get a builder’s warranty on new homes.
You will get the emotional benefit of "newness".
Cons of buying a new property:
You can’t add value through renovations/improvements as easily, so it may take longer to achieve capital growth.
Historically, newer properties are the first to get hit when the market moves down. Established properties tend to maintain their value or adjust a few degrees over the long term.
Pros of buying an old property :
You can add more value to an established property through renovations and improvements.
Older tend to hold more value in the land than the building itself. In general, land tends to grow in value while building loses value over time.
Older properties have a proven resale value since any exchange is between a willing buyer and a seller, and will likely meet the market.
Older properties tend to be located in areas with more established infrastructure such as transportation, schools, hospitals, etc. These infrastructures are also drivers of property growth.
Cons of buying an old property:
Old houses require more maintenance.
Older properties have lower rental returns compared to newer units.
I think it totally depends upon your circumstances and needs.
@mattpayne Being a house flipper and owner of buy and hold rentals, I could say that your question is just way too broad to answer.
This varies greatly based on the area/ neighborhood/ city/ location. For instance, an older house in an up and coming gentrified downtown area could appreciate very fast.
However, in my buy and holds I try and buy things I can force equity into, which generally are houses built from the late 50’s to late 80’s. The real gems are usually 70’s modern ranch style that need a lot of cosmetic remodeling, which are in clean suburban areas.
Great breakdown. From my own experience, my older property actually appreciated faster than my newer one — mostly because the older place was in an established area where land value kept rising. The newer home looked great, but it didn’t grow much in value until the whole neighbourhood developed. So I’ve learned that location and land value often matter more than the building’s age. Have you seen any difference in appreciation between properties you’ve owned or looked at?
From what I’ve observed (though I’m more on the land side than residential), appreciation tends to be more about location and market dynamics than the age of the structure itself.
I’ve seen older properties in desirable, established neighborhoods appreciate faster than newer properties in the suburbs, mostly because they’re closer to urban cores where land is scarce. People pay a premium for walkable neighborhoods with character, and in hot markets there’s always teardown or renovation potential that adds value. But at the same time, newer properties in rapidly developing areas can see strong appreciation too because they appeal to buyers who want move-in ready homes, and new construction areas usually signal economic growth is happening.
The real variable is condition and desirability though. A well-maintained 1960s ranch in a good school district might crush a poorly built 2005 McMansion in a declining suburb. And a neglected pre-war home might lag behind everything else regardless of its vintage charm.
If you’re evaluating deals, I’d probably focus more on the neighborhood trajectory and what buyers in that specific market are actually looking for rather than just the build date. That’s where the real appreciation story is.