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Updated over 3 years ago on . Most recent reply

User Stats

38
Posts
15
Votes
Matthew McMenamin
  • Investor
  • Indianapolis & San Diego
15
Votes |
38
Posts

Do Appraisal Gaps Limit Gentrification?

Matthew McMenamin
  • Investor
  • Indianapolis & San Diego
Posted

I'm looking at a neighborhood that has always been rough. Today, 3 new spec homes have been built and sold simultaneously for $350,000+. In this area, nothing has sold for more than $60,000. Old properties, run-down, crime, etc. I understand why someone would want to buy these houses. I think appreciation is a sure bet based on where they are located. The neighborhood will surely "turn." But who bought these houses today?? There is literally not a single comp to support their value. I'm sure that the bank's appraiser would not agree with the $350,000 price tag. Very few retail home buyers (especially at that price point) buy their homes in cash. So this begs the question: how do appraisal gaps not restrict gentrification?

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