The Neighborhood Wish List: 3 Things to Consider
Let’s face it; buying a home is an emotional undertaking. First, there’s that huge wad of money you’re spending. Then, there’s the fear that years of mortgage payments will disappear and you’ll actually lose equity on the home.
If you shop carefully, however, you can banish those anxieties. The trick is to keep yourself from focusing solely on houses and expand your vision to the neighborhood in which the houses are located.
1. No kids? Schools are still important
Homes in good school districts cost more for a reason: they hold their value better than homes in poor-performing school districts.
One study claims that “the difference in home values in an A-rated school neighborhood can be as much as $50,000 on a $300,000 home.” A Brookings Institute study claims that the difference in price in a neighborhood in a quality school district and one that is underperforming may be as high as $205,000 or more.
Whether or not you have or even want children, buying a home in a good school district offers a bit more security about its future value.
2. That lovely open space
Last year, in a medium-sized city in Minnesota, the residents of a 25-year old subdivision, surrounded by privately-owned open space, were told that a Walmart Super Center (open 24 hours) was coming to town and it would be located adjacent to their neighborhood.
It turns out that the open-space around the neighborhood was zoned commercial (homeowners had no idea) and the landowner was completely within his rights to sell to the big-box store.
Now, as it turns out, this wasn’t a catastrophic event when it came to nearby home values. The National Bureau of Economic Research, in fact, conducted a study of home values near Walmart Stores and found that “a new Walmart store actually increases housing prices by between 2 and 3 percent for houses located within 0.5 miles of the store and by 1 to 2 percent for houses located between 0.5 and 1 mile.”
The business’ impact was to the homeowner’s quiet enjoyment of their homes that they’d become accustomed to.
Avoid this problem by checking the zoning for any nearby vacant parcels of land.
3. The neighbors
While good schools, Walmart (and Whole Foods stores, by the way) and even graveyards, believe it or not, help nearby homeowners retain their home’s value, there are lots of other issues that will decimate it. Neighbors are the culprits for many of these.
You may lose as much as 15 percent of your home’s value if a number of your neighbors go into foreclosure, if a funeral home opens nearby, if a sex offender moves in or if neighbors neglect their landscaping, according to the Appraisal Institute.
If you think you’ve found the home of your dreams, don’t stop investigating. Think about the future and widen your research beyond those four walls and a roof.