Are cheaper homes better investments?

It’s interesting to me how the cheaper real estate in an area is typically in high demand compared to more expensive real estste. For example at the Jersey shore by Long Beach Island, a small home on a lagoon in Beach haven West was worth about $90,000-$100,000 in 2000. Today it’s more like $350,000. During the same time, a house on the bay, bigger house and better location, went from being worth around $400,000 – $450,000 up to about $800,000.

In this case the lesser home was the much better investment. The location wasn’t as nice and the house was much smaller but there’s always pressure at the entry level it seems. Take this article for example. It says that people are giving up on amenities or increasing their budgets in the $200,000 to $400,000 range in Philadelphia.

However, the multu-million dollar homes (often highly personalized) of professional athletes are not selling. When they say that there are more homes on the market, you wonder if that means there are more pricey homes on the market. Entry level homes in the New York / New Jersey area don’t seem to suffer from flagging demand at all.

And it makes you wonder what will happen to these homes in Philadelphia. Is the view worth millions in this market?

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