Montrose Co Real Estate
Montrose CO Real Estate Blog

Cinderella Homes – Do Neighborhoods Affect Montrose Co Real Estate Values?


The idea of progression must be considered to properly answer this urban legend. Progression is, “An appraisal principle that states that, between dissimilar properties, the value of the lessor quality property is favorably affected by the presence of the better-quality property.”

In other words, appearance, value, and desirability of the surrounding neighborhood can and will effect Montrose Co real estate values.


The Jeff Foxworthy Syndrome

hub-cap-wind-chime“You might be a redneck if you have a hubcap wind chime hanging from the entrance to your cul de sac.” The jokes go on and on but there is a simple truth that make these jokes hit home for many of us on the rural Colorado Western Slope. Your property value may be at risk if HOA, covenants, or restrictions are not in place where your home resides. Although funny, a hubcap wind chime (along with an engine block on cinder blocks in the front yard) just may be the reason a property and neighborhood has value reduction.

The Cinderella Syndrome

A fairytale for many yet another simple truth for most; you may be judged by who you associate with. Cheif Economist Stan Humphries recently addressed this cliche, seeking to find the truth behind the urban legend of progression. By drilling down through heaps of data, Humphries found that investors who purchased homes in the lowest 10% of that market only turned substantial profits in “hot” neighborhoods.

montrose-co-real-estate-invest-2So then what exactly defines a hot neighborhood?

A hot neighborhood in Montrose Colorado would be a neighborhood that has experienced five consecutive years of above average growth. Also, these neighborhoods must be deemed “up and coming” and experiencing high demand.

The downside to this principle is that a Montrose real estate investor must time their purchase perfectly. Ideally, their home purchase must occur at the beginning of the boom. A savvy real estate investor can be akin to the cool kid who can identify trends before the masses do. Failing to identify the proper timing and location to purchase real estate in Montrose can be costly, as with any risk and reward scenario.

Practical Advice

If you don’t get the Cinderella house in the right neighborhood at the right time, your carriage may turn into a pumpkin. A cheap home, purchased at the end of a hot period or in a “false start” neighborhood, will most likely perform worse than even the bottom 10% in that neighborhood.

According to the data analyzed by Humphries, practical advice suggests that investors should buy a fair priced home, in a spot-on neighborhood; ie. purchase a home in the most expensive neighborhoods you can afford that is not in the lower 10% of the surrounding home values.

Looking to sell or invest in the Ouray or Montrose Co Real Estate Market?

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Fillmore W Galaty, W. J. (2010). Modern Real Estate Practice. La Crosse, WA: Kaplan.

Spencer Rascoff, S. H. (2015). Zillow Talk – The New Rules of Real Estate. Ney York, NY: Grand Central Publishing.

This information was gathered from Keller Williams, The National Association of Realtor, CoreLogic data analysis firm, Montrose Association of Realtors, The National Association of Home Builders, The City of Montrose, and the Mortgage Brokers Association. This data is considered accurate, but is not guaranteed. Copyright Atha Team LLC 2015. All Rights Reserved.