Should I Buy the Most Expensive House on the Block?

30 11 2007

You’ve heard the old sayings before. They’re proverbial bits of wisdom and tend to surface in most conversations concerning real estate. And they’ve been around forever. But are they really true? And if so, why?  

Recently, Texas Realtor magazine highlighted a few of these rules of thumb:

  • “Don’t buy the most expensive house on the block.”

  • “Location, location, location are the 3 most important things.”

  • “Buy in a good school district even if you don’t have kids.”


True. Generally speaking, lower-priced properties tend to pull down the value of higher-priced properties, and more-expensive properties pull up the value of lower-priced properties.”

Mark Dotzour, chief economist at The Real Estate Center at Texas A&M agrees, 

“The underlying theory is that people want to feel like they’ve moved into the nicest neighborhood they can afford. Ignoring that theory may hurt sellers on resale. If sellers have a $250,000 home, and the rest of the homes in the neighborhood are valued in the $180,000s, they’ll be competing with properties that aren’t in their neighborhood.

If all the homes in another neighborhood are worth about $250,000, buyers might think, Do I want a really nice house in a lesser-quality neighborhood or a more-moderate house in a higher-quality neighborhood?


The exception might be a property with a unique feature for the neighborhood, for example, the only house on the block that backs to the greenbelt or has a desirable view of the hill country or downtown.

Buyers, however, will want to find out if any future developments might affect or diminish this unique feature. For instance, a new phase of the subdivision could replace the greenbelt, or a new high-rise building could block the once cherished view. 

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