You have likely heard the mantra “location, location, location.” It is something often repeated when you are buying a house. We tend to hear from real estate experts that location is more important even than particular features of a house when it comes to resale value.
The elements of a good location can include the neighborhood itself or community amenities like parks, restaurants, coffee shops, fitness centers, and shops. In terms of real estate, location also often encompasses the nearby schools and the crime rate in some cases.
So why is location so important if you are thinking about buying a new house?
Location Features That Make Real Estate More Expensive
In general, some of the features that make real estate more expensive or valuable related to location can include:
- Attractive geography features. If a neighborhood is closer to the water or has views of the mountains, location features can make a property more desirable and drive up prices. Geography features will also stay consistent, so you don not have to worry that your property values could decline because of this type of location consideration. For example, neighborhoods can fluctuate as far as trendiness and desirability, but if you buy near a geographical feature, this will maintain popularity in most cases.
- Schools are part of the location, as mentioned above. If you are buying a home, you want to think about the schools’ reputation and the average test scores, even if you do not have kids. It will matter for resale value. Buying in a good school district will improve your return on investment.
- Having amenities nearby like gyms, dry cleaners, grocery stores, and other things you need to make your life more convenient or fun is always good for choosing a location.
- Some people like walkability. If you are in an urban area, this is a big one. Depending on the type of area, the availability of public transportation options might factor into location.
- The neighborhood itself can be a specific subcategory of location. We might think about location as a larger overall part of a city or town, and then the neighborhood is just a slice of whatever that part is. Most people want communities that are active with engaged residents. Neighborhoods with easy access to public transportation and major roads tend to stay in favor with buyers too.
The Value Of A Good Location
When someone is buying a house, they are not just buying the structure. They are buying a piece of land. That land is a big part of the purchase’s inherent value. The house or structure currently on any given land may be torn down, remodeled, or renovated, but the land’s location is not going to change.
Even if you are buying a condo or apartment within a larger building where other people also have ownership, you still have to think about the location.
It all essentially comes down to supply and demand. There is usually a limited supply of properties in the best locations. Therefore the demand will continue outpacing the supply in almost all cases, except for a few scenarios.
Consider The Future
When you are buying a home, if there is even a chance you could sell it at any point, or you are looking at it as an investment, you have to be somewhat forward-thinking. You want to think not only about how people might view the location now but how that could change in the future.
Of course, there is no way to know for sure, but you do want to consider perhaps whether a neighborhood that currently is not that desirable could in the future be one that’s considered up-and-coming. If a neighborhood is centrally located near public transportation, it does have potential, even if it is not the best right now.
Being able to think about what the future demand in a location could look like is often what makes real estate developers and investors successful.
When the location of a home is good, not only might you be able to see it go up in value in the future if you sell it, but it could also have more potential as a renter. Renters tend to be younger, and they want convenient access to those amenities that they feel are in line with their lifestyle or make their lives easier.
Location is what you are buying when you purchase a new home, so it is something to research and think about carefully. You can change whatever home sits there, but you cannot do anything about the location once you make a purchase.