You’ve all heard the real estate mantra “Location, Location, Location,” when talking about home values. The cost and desirability of approximately the same home can vary widely, based on where it is located. Location can refer to a specific part of the country, a state, a city or even a neighborhood.
Location, land and home value compared
Real Estate appraisers consider a home’s location when they determine property values. They compare the home and land to similar properties in the same area. The initial price is based on the value of the land at the time of purchase, the cost of construction of the home, and a percentage of markup for profit for the builder. The land and home value can rise and fall with the value of the properties around it and the commercial or recreational activities that develop in close proximity.
Obviously, different buyers appreciate different aspects of the location of a home. Many people would like our home, because it is only 15 – 30 minutes from several ski resorts, but we don’t ski. However, there are some considerations with regard to location that don’t change much, no matter who the buyer is.
Locations consistently more in demand than others:
- Near the ocean, rivers, lakes, or parks and other outdoor recreation opportunities
- A school district with high test scores and a good reputation: visit org
- Panoramic views of cities, the ocean, mountains, or golf courses
- Easy access to shopping, entertainment or recreation opportunities
- Well-kept neighborhoods
- Areas with bigger, better-shaped lots
Locations where demand and property value are lower:
- Residential property close to commercial buildings
- Noise, traffic, and other activities caused by a nearby business or school
- Retail developments under construction
- Proximity to railroad tracks, overpasses, airports, and busy intersections
- Neighborhoods with higher crime rates: visit comand use a zip code to search
- Hazardous conditions, such as poor air quality or a vacant building
Additional location factors that may affect property value:
- New or planned construction nearby
- Vacant land that could be developed
- Changes in zoning laws
- Weather and the probability of natural disasters
- Property taxes
When you buy a home in a good location, it’s usually a wise long-term investment. Real estate agents often advise their clients to buy a house in need of some TLC on the best street in the neighborhood. Why? Because fixing up a home in a great neighborhood will give you the best return on your investment, when it comes time to sell.
“You can change the price of the house. You can change the shape the house is in. But you can’t change the location,” says Toni Spott, a top-selling realtor in Milwaukee, Wisconsin. Everything about the location can affect the value, affordability and livability of your home. The appraised value of your future home helps determine the size of the loan you can qualify for. Be sure to ask your Citywide loan agent how location figures into the value of the home you are about to buy.
Sources:
https://www.thebalance.com/what-location-means-in-real-estate-1798766
https://www.homelight.com/blog/location-location-location-what-matters/
https://www.foxbusiness.com/features/why-location-matters-in-real-estate
https://www.equities.com/news/why-location-is-so-important-for-investing-in-real-estate