The Value of Established Neighbourhoods
Over the last few decades, many developers built entire neighborhoods rather than single houses as a way to invest less while gaining more profit for their work. They often negotiated impact fees with the small towns where they developed, and property values rose as the new neighborhoods became integrated into the local area. Those new developments have become an established part of the town, and property owners have seen their valuation rise over the years.
When it is time for another new development to be built, many of those who bought homes in what are now established neighborhoods are very interested in how new building will affect their property value. They often see new building as a potential downturn in the value they have established in their own property, so development companies must show studies that there will be a positive impact on real property value. If they fail to show their project will raise values, they often find there will be an uphill battle to obtain building permits.
Those who own homes in established neighborhoods often see apartments as a drain on their value, so builders who want to create massive complexes find their work difficult to begin. Local people see renters as less responsible when it comes to property upkeep, and builders must establish a way to assure them that any complex will add value to their existing home.
While impact fees to cover the costs of new growth are part of the cost of building, there are other ways that developers can help local communities to be able to begin their project. Some of them establish legal documents where the apartment complex will be managed in such a way as to ensure property values in the area remain high. This is becoming a standard way for developers to ensure growth in an area without depleting existing property values, and it is their best negotiating tool for getting the permits to build.