Preserve charm or enhance home value?

Silicon Valley has charming neighborhoods, and there is an understandable desire to retain the charm and feel of the community. To preserve this appeal, some neighborhood associations enact building restrictions aimed at curbing new construction, especially larger or multi-floor properties.

These new restrictions, however, can have an impact on local housing values and appreciation rates.

Homeowners in favor of building limitations want to maintain and preserve the existing charm and character of the neighborhood. Additionally, they are concerned about the loss of light, views, and privacy associated with being next to a multi-floor property. These are all legitimate concerns, but they do have associated costs.

In towns like Palo Alto, where land is limited, builders need to maximize the square footage of a property while keeping costs low.

Two-story homes can be constructed more economically than one-story homes of the same square footage because of the reduced foundation and roofing costs. Additionally, two-story homes take up less of the precious lawn area. Because of this, newer construction is often seen in areas with less onerous building restrictions. This newer construction tends to increase the average price per square foot in the entire area, as less desirable homes get razed to build new homes. In contrast, builders’ reluctance to purchase homes that face increased restrictions slows the gentrification process, which can have an impact on the fair market value of homes in poor condition.

Be sure to consider the impact of building regulations or proposals for new restrictions when you consider purchasing a home in Silicon Valley.