"Location, location, location!". How many times do we hear or say that when the subject of real estate comes up? It's funny that we say it but, oftentimes, we as homebuyers don't practice what we preach and then later kick ourselves for purchasing that great house next to the freeway. As a Realtor, I wanted to highlight all of the things that I've learned over the years when it comes to location and how it affects your home value.
1. Neighborhood or No Neighborhood
This is obviously a "taste sensitive" subject that can bring about a plethora of pros and cons for both sides of the debate. I believe that demand is the key factor here. More buyers are looking to purchase within a neighborhood versus in the country, and everything always comes down to supply and demand. High demand always increases value.
2. Where is Your Home Within the Neighborhood?
Properties within the same neighborhood that have similar square footage can have different values. Homes in cul-de-sacs or courts tend to be more desirable due to less traffic and better safety. On the other hand, homes that back up to the main road that's in front of the neighborhood can deliver a lot of noise and be less desirable.
3. School Systems
In nearly every city of the country, homes tend to increase or at the very least hold their value where there are excellent schools. According to the National Association of Realtors:
"29% of home buyers listed school quality and 22% listed proximity to schools as deciding factors in their home purchase."
4. Living Near a School
While being in a great school system is always a plus and can benefit your bottom line when you sell, living too close to the school could adversely affect your value. I'm all for school pride and Friday night football; however, be mindful of how the bright field lights and sounds of the marching band could make an impression on your property down the road. Another factor could be dealing with the line of cars from parents picking up their kids after school, with which I actually had experience.
5. The Possibility of Future Development Near Your Property
Of course, you can't predict what the future may hold, but you can factor in the possible negative or positive impacts of vacant land near your location. For example, the 20 acres next to your community may be developed into another great subdivision like yours. On the other hand, it could be the new home to a major manufacturing plant. In my area, there may be a beach home across the street from a vacant beachfront lot on the Gulf, which gives the homeowner unobstructed views of the water. Who's to say that someone won't build on it in the future?
6. Proximity to Local Businesses
In recent years, a new legitimate term has been coined to gauge how property values are affected by how close they are to stores and restaurants - "The Starbucks Affect". An article from CNN explains,
"Between 1997 and 2013, homes closer to the coffee shop increased in value by 96%, compared to 65% for all U.S. homes,"
On the other hand, locations that have nearby businesses like airports, adult entertainment, bars, tattoo parlors, etc. could possibly play havoc on your property value in the future. Pick your poison and choose wisely.
7. The View
This is a no brainer. Obviously, there will be more value in a home that overlooks a tranquil lake versus a cemetery. I work in an area in southern Alabama that offers incredible views of the Gulf, and there are sizable price differences between having a full view and having to lean over the balcony to see the water.
8. Homeowners Association
"To live in an HOA or not." I hear different arguments from both sides of this debate. I could (and probably will) write an entire article on this topic but, in general, I do believe that property values would hold better in a location that has a Homeowners Association. I think that most people would rather have a governing force to oversee whether your next door neighbor can have five cars sitting on cinder blocks in his front yard or not, which would obviously affect your value.
9. Neighborhood Amenities
An amenity is an asset within a community that a person finds desirable. Some amenities come along with the development naturally (like a lake) and some come with a price. Monthly fees typically pay for things like a community pool, playground, tennis courts, BBQ area, and even yard maintenance. Sometimes, the amenity package alone can draw potential homeowners, making the location desirable and increases value.
10. The Size of a Neighborhood
I think that size does matter when it comes to this. If you buy a home in a huge neighborhood, there are factors that you should consider, like simply trying to enter or leave could be a pain. Picture trying to leave for work in the morning along with 100 other cars. Also, is there a traffic light at the entrance of the subdivision?
11. The Main Thoroughfare Outside of Your Neighborhood
If your city is growing and neighborhoods are being developed left and right, think about the connecting roadways that are tying everything together. Are there an adequate amount of traffic signals? If you live on a two-lane highway, how many subdivisions are feeding it? Are there plans to expand roadways? This could be a factor that affects value.
12. Close to Highways
Although convenient, the biggest negative with highways that will definitely make an impression on your value is traffic noise. If you are bothered by noise when you're trying to sleep, chances are potential buyers for your home down the road will be, too.
13. Near Parks and Open Spaces
Most of us know that we should be more healthy or at the very least we want our kids to be. Through various studies, we find that living near a park or other open spaces does increase value according House Logic. Here are some figures:
Natural Parks: $10,648
Golf Courses: $8,849
Specialty Parks: $5,657
Urban Parks: $1,214
14. Proximity to Good Jobs
Long term employment opportunities in an area play a major role in solidifying your property's value. Again, it all comes down to demand and everyone likes security.
15. The Biggest House on the Block
In the real estate and appraisal world, there is an actual term for this: Regression. Regression is when the value of a superior property decreases when located in an area of inferior properties. So, it's better to have an average home in a great neighborhood than to have an awesome home in a undesirable one.
16. Style and Layout
You may like the subdivision that looks like it came out of an episode of "Leave it to Beaver"; however, most probably won't, if they have a choice. Most buyers are looking for neighborhoods that have homes with open floor plans and decent-sized yards. Also, the "cookie cutter" phrase is not necessarily a positive one when spoken about. Something to think about . . .
Good tree cover in your neighborhood: 6-9% increase
Mature trees in high income neighborhoods: 10-15% increase
18. In a Quiet Location
Ahhh, there's something to be said to having a home in a quiet location with birds chirping, a stream running in the background, and Bambi eating dandelions in your front yard. Although I don't believe demand will cause these properties to increase dramatically over short periods of time, there is a market for these homes. Values should at least hold steady and gradually increase.
19. Crime Rates
Yes, whether you live downtown or in suburbia, there will always be crime of some kind. Accessing this data is so easy for buyers these days to determine where crime is the worst or at a minimum. Always do your due diligence in this area, as crime does play an important role in your property value.
When you're searching for your next home or investment property, take these factors in mind and always remember, the actual physical structure depreciates over time. It's the land that grows in value and it is all about location, location, location!