By Jonathan Deesing
The adage “location, location, location” is popular among real estate agents for a reason: a neighborhood significantly affects a home’s value. Whether you plan on flipping a home, renting it out, or living in it yourself, it’s critical to investigate a neighborhood thoroughly—beyond simple safety statistics—before making a purchase. When looking in new neighborhoods for real estate opportunities, consider these five essentials.
School Districts
Proximity to good schools is one of the biggest features that can influence a buyer’s decision to purchase a home. According to a 2015 study conducted by Trulia, 34% of Millennials said living in a great school district was more important than the actual location of the home. Families will pay more for a home if it’s located within a top-rated school district.
Look at the rankings of school districts, including test scores and graduation rates, when considering neighborhoods to invest in. Start by researching schools within the U.S. Department of Education’s National Blue Ribbon Schools Program, which recognizes public and private elementary, middle, and high schools based on their academic excellence.
Growth Rates
Invest in a neighborhood that’s growing and forecasted to continue growing over the next decade. Have new real estate developments, schools, and shopping centers been built in the area in the last few years? Those are all signs of growth. Beyond looking into these specific considerations, take a look at state population growth rates. Oregon is currently the most moved-to state, followed by South Carolina and North Carolina, whereas New Jersey loses the most residents. Two of the greatest reasons for the increase in Oregon’s population are job growth and affordable retirement living. As more people move to Oregon and the Carolinas, the demand for housing in these areas will increase.
Walkability
Eco-friendly, green living is a trend that will only continue to grow. Many homebuyers want to purchase homes in neighborhoods that offer easy access to public transportation and shopping so they can drive less frequently. Walkability can be difficult to rate simply by visiting a neighborhood. Check out WalkScore.com, which rates U.S. neighborhoods based on their access to public transportation and their proximity to parks, grocery stores, and shopping centers.
Accessibility
Similar to walkability, a neighborhood’s accessibility to popular resources is an attractive feature for potential homebuyers. In early 2015, Starbucks made news across real estate channels with the “Starbucks effect.” According to a study conducted by Zillow, the value of a U.S. home located within a quarter-mile of a Starbucks rises faster than a U.S. home that isn’t located near the coffee chain. Between 1997 and 2013, homes near a Starbucks increased in value by 96%, compared to 65% for all homes. Does Starbucks truly have this much influence? Not exactly. Starbucks builds new locations in up-and-coming neighborhoods with access to diverse resources, such as shopping centers, restaurants, and movie theaters, which make the neighborhoods more attractive in general.
On the opposite side of the spectrum is another trend affecting real estate development: food deserts. Food deserts are geographic areas with limited access to affordable and healthy food options due to a restricted number of grocery stores within easy traveling distance. Before investing in a property, evaluate the neighborhood’s access to public schools, grocery stores, hospitals, and shopping centers.
Rising Home Prices
Purchasing in an expensive neighborhood or city can be a double-edged sword. While the home’s value will be high upon selling, it will also be expensive to buy. Rather than search for the wealthiest neighborhoods, investigate markets with the fastest growth in housing prices, which offers you the opportunity to make a greater profit in the long run.
Currently, Palo Alto, California is the city with the fastest-increasing home value: between 2009 and 2014, home values there increased by 75%. Other cities in the top 10 include Cupertino, Mountain View, Sunnyvale, Redwood City, Menlo Park, and Foster City—all of which are within the greater Silicon Valley area. But because home prices in this tech capital are already high, look to invest in up-and-coming technology hubs, such as Austin, Dallas, Seattle, Chicago, and Miami. As these cities’ technology jobs increase, the demand for housing—and the value of homes—will also increase.
Investing in a neighborhood is just as important as investing in a house. By taking the time to research desirable neighborhoods with potential for growth, you have the opportunity to maximize profits, whether you sell immediately or ten years down the road.
Jonathan Deesing is a relocation specialist with imove.com, where he writes about all things moving and packing. Most of his free time is spent popping bubble wrap and making cardboard box forts.
