top of page
  • Alexander Wissel

Cracking the Homeownership Code: Why Location Is the Holy Grail of Home Value

Is there an Average Weight?

  • The importance of proximity to amenities, employment and transportation and commuting can affect home values and desirability.

  • Neighborhood safety, economic stability, and potential for future development impact home values.

  • Strategies for selecting an attractive location to maximize you home returns start with focusing on what you would look for.


Why Location Is the Holy Grail of Home Value - Source: Pexels.com
Why Location Is the Holy Grail of Home Value

We often hear that ‘location, location, location’ is the only important thing in real estate home value. But why? What makes a home worth more and another worth less? I’ve been a financial advisor, an insurance agent, a market researcher and I’m currently a residential home specialist.

Today I’m going to dig in and tell you exactly what aspects of ‘location’ drives home prices. We aren’t presenting them in any particular order, just giving you a birds-eye view of the main drivers of home values.


The location of a property significantly affects its value because it determines access to amenities, transportation options, safety levels, economic stability, and future development and growth prospects. These factors influence the demand for properties, impacting their market value and potential appreciation over time.

Proximity to Amenities

One of the big factors that make a location attractive for a real estate home investment is its proximity to essential amenities. Is the home in a walkable area? Is it close to stores, malls, grocery stores, and other retail? How close is a home to things people want in their lives?


Potential buyers often look for properties that are conveniently located near medical care or hospitals, parks, and recreational facilities. Access to these amenities not only enhances the quality of life for residents but also increases the demand for properties in the area.

Personally, I need a Starbucks in my life. So I make sure I’m less than a mile from one…

Neighborhood Safety & Security

Safety and security are key concerns for individuals and families when choosing a place to live. What good is a park in your neighborhood if you don’t feel safe there? A location with low crime rates, well-lit streets, reliable emergency services, and a sense of community is important.

Real estate investments in safe neighborhoods tend to hold their value. Safety is something that has been prized for decades, and we doubt that will ever go away.

Economic Stability & Growth


Economic stability and the potential for growth of a location are crucial factors to consider for new home purchases. Areas with a diverse and thriving economy, robust job market, and a range of industries tend to attract homebuyers and investors.

Economic stability ensures that your investment is less susceptible to market fluctuations, and potential buyers or renters are more likely to be able to afford the property.


In our region outside Baltimore and Washington D.C. we have a lot of government employees combined with a large medical and education industries. They provide an economic buffer and stabilize our home markets considerably.


Future Development & Urban Planning

Research the local government's plans for infrastructure improvements, commercial developments, or urban regeneration projects can provide insights into the growth potential of an area. The lack of development or inability of new home construction should also be noted.


Buying in an up-and-coming neighborhood or nationally known growth city can yield substantial returns as property values rise with the progress of planned developments.

Schools


Proximity to reputable schools, whether it's well-regarded public schools or prestigious private institutions, can significantly impact the desirability and value of a property. Families with children often prioritize access to good educational institutions, and properties in areas with top-notch schools tend to attract higher demand.

In our broader market in Central Maryland we have some of the best public schools in the country. Schools are one of the biggest drivers of property values in our region. A sought after school can command a premium vs its peers – roughly $40k-$80k for a $750k home. It’s a substantial difference, but it’ also a double edged sword.

It gets ugly when certain counties redistrict top schools with nearby average ones. It’s not just a change in school, but potentially a loss of tens of thousands.

Job Opportunities & Commute


The availability of jobs and the ease of commuting play a vital role in determining the attractiveness of a location. Areas with a thriving job market, diverse industries, and employment growth potential are more likely to attract stable home owners.

Properties that are situated near major employment hubs, have efficient transportation links, or offer shorter commute times are highly sought after. It brings us to our next category.

Transportation & Infrastructure


Good transportation links and well-developed infrastructure are vital considerations for homebuyers. Easy access to major highways, public transportation, airports, and railway stations can significantly impact the attractiveness of a location.

A well-connected location not only improves daily schedules but also enhances the potential for additional economic growth, job opportunities, and overall development.


Technology & Energy

These two newer concerns are growing increasingly important for home values. And they are interrelated. Consumers today need high speed internet, reliable wi-fi and cell phone networks. The power networks they rely upon, and they type of power they provide is also becoming increasingly important. Technology companies are increasingly moving to places with cheaper power as it becomes more of an expense.


Location Is the Holy Grail of Home Value


There you have it. The global view of the main factors that drive real estate prices. We decided to leave some items like socio-economic levels alone for this list. While they are impactful on home prices, they seems to be effects of home values rather than the cause.

Location is a paramount consideration when investing in real estate. The attractiveness of a location is determined by the multitude of factors we just discussed. In a perfect world we could systematically dissect the drivers of a single home’s property value.


Unfortunately we can’t and even trying to come up with a homes value is a challenge – as evidenced by how many listings take price cuts because they are overpriced.

Comments

Rated 0 out of 5 stars.
No ratings yet

Commenting has been turned off.
bottom of page