How an Influx of New Homes
Could Affect One Family's Life

An enormous new housing development is springing up in our community about a mile from our home.

Our sleepy New Jersey suburb, an hour by train to New York City and 15 minutes from the Jersey shore, will soon have 120 new luxury two- and three-bedroom town homes, with asking prices that range from $450,000 to $550,000. That's about what an existing three-bedroom home in our town would go on the market for now.

When construction began earlier this year, I wondered how it would affect our home's value and property taxes. I also am concerned about our quality of life: Will the influx of new residents that will eventually inhabit it -- detract from relative peace and quiet that made our home's location so desirable to us in the first place?

Gerry and I bought our three-bedroom home from his father Gerald five years ago, when he bought a smaller home in a retirement community farther south. My father-in-law fell in love with the property and the quiet neighborhood 35 years ago. The house, covered in red aluminum siding and set on a little over an acre of green grass dotted by walnut trees, reminded him a bit of his family's farm back on "the Old Sod" in Ireland. His dream had long been that one day one of his sons would raise his own family there as well. When Gerry and I got married, he would mention how much he'd like to sell his home to us when he was ready to retire.

We couldn't have been happier to accept. Some of Gerry's happiest childhood memories happened in the nearby playground and the creek a block from his home. An added plus: A few of Gerry's childhood friends in the neighborhood also bought their parents' homes. We all think it's kind of cool that the second generation is growing up as friends, racing each other along the same bike paths, tormenting a new generation of snakes and frogs.

For me, having grown up in Jersey City, Gerry's family home was the equivalent of "The Ponderosa." (I actually used to call it that.) I remember the first time Gerry took me to meet his parents in "the suburbs." We took the hour-long ride from my apartment, passing by working farms, and finally pulled up into their 100-foot-long driveway. Lounging in their backyard, listening to birds chirp and the occasional woodpecker, I marveled at how peaceful the neighborhood was.

Sixteen years later, while our neighborhood remains largely the same, the surrounding town has undergone substantial residential and commercial development. McMansions have cropped up where livestock once grazed, strip malls have replaced small businesses on our town's main drag, and with increased traffic today it takes about 20 minutes to make it from one side of town to the other, double the time it used to take.

Which brings me back to the new residential development underway. Since Gerry and I don't plan to sell any time soon, we're not worried about the impact on our home's market value. But we are curious. How the units will affect existing home prices in our area will depend largely on who buys them, says Ann Adair, senior economist at Montana State University. Ms. Adair has done several studies on the cost versus the benefits of new residential developments on existing homes.

"If the buyers are people who would otherwise not live in this community, there's no reason for it to depress the existing housing market because you're getting new people coming in," Ms. Adair says. "But if it's a situation where you have townspeople downsizing and putting their homes on the market in order to buy the town homes, you could have some short-term downward pressure on existing-home prices because you'd have a lot of homes coming on the market and no new demand from out-of-towners."

Another wildcard is the local real-estate market. While the Monmouth-Ocean region of New Jersey has seen some of the biggest home-price increases in the nation -- the median price of existing homes has doubled in the last five years to $377,800, according to the National Association of Realtors -- rising interest rates and a sharp increase in the number of homes on the market have already forced homeowners in our area to offer price reductions.

Still, over time the new townhouse development will likely boost single-family home prices. "If buyers are willing to pay $500,000 to live in a town home now, over the years you'll find families who are willing to pay more to have some breathing room in a single-family home," says Ms. Adair.

Would our property taxes also head higher? Very likely so, says Blanche Evans, editor of trade publication Realty Times in Dallas. Our home hasn't been reassessed since we moved in five years ago, and she says the combination of soaring existing-family home prices and the introduction of luxury town homes will likely boost our taxes significantly in our next township-wide property tax reassessment (rumored to begin within the next two years).

"The assessment rate that's set on your home will be based on comparables, and those comparables will be based in part on your new neighbors," Ms. Evans says.

Ms. Adair of Montana State University does note that the increase may not be as substantial as one would expect when a new development comes in, because the new owners will also generate tax revenue for the community.

On a positive note, hundreds of new residents will likely attract new jobs -- and perhaps new businesses -- to our area, says Ms. Evans of Realty Times. The new business tax revenues may help to offset residential property taxes.

To get an idea how much more we might pay in taxes, I checked out figures for other homes near ours on Zillow.com, a Web site that uses public records to estimate home values on more than 60 million homes nationwide. I compared our home's current assessed value and annual property taxes ($168,000 and $5,883, respectively) to those of neighbors who purchased homes in the last few years and would be subject to a more-recent assessment. One paid $6,690 in property taxes last year. It's an eye-opener for what the future might hold for us, because his home and property are about two-thirds the size of ours.

Bottom line: our home's value is headed higher, and so are our taxes. But how to quantify the new development's impact on our daily lives?

For sure, we'll be spending a lot more time getting where we have to go. Traffic on our town's main drag is congested on most days, and we often find ourselves mulling whether a shopping trip or errand-run is absolutely necessary before heading off in the car on weekends. The introduction of 120 new cars (minimum) to the immediate vicinity is likely to make it a lot worse. It could also mean higher fuel costs.

Then there are routine tasks like grocery shopping. It takes about two hours to get us through a typical weekend grocery-shopping trip, a good half-hour of which is spent making it through the checkout. Hundreds of new mouths to feed in town will likely add to that drudgery. Already I find myself paying more to shop at our town's new Whole Foods store for routine grocery runs, rather than sitting in traffic and standing in line for less-expensive groceries at Stop & Shop a few hundred yards down the road.

Would we ever consider moving because of the development? No. We purchased Gerry's family home when his father Gerald retired in 2000, and our plan is to live there at least until we retire. I love the fact that our six-year-old son Gerald rides his bike down the same driveway my husband did 33 years ago. One retired couple in our neighborhood who watched Gerry grow up say Gerald looks so much like him at that age that they feel like they're in a constant state of déjà vu.

It's our hope that one day Gerald's own son will follow his grandfather's bike tracks down the driveway, too. We plan to pay much closer attention to proposed projects in our town going forward, and to voice our objection when we feel a project may adversely impact the quality of life in our town, in the hopes that when the time comes Gerald will still want to live in the town he calls home.

Email your comments to rjeditor@dowjones.com.