My spouse has dreams of us living in a house on the water. Problem is, when we looked at such a house years ago, the green flies were biting so badly I couldn’t stand being there for 10 minutes, let alone a life time. Yet any knowledgeable real estate agent would say that home’s location was its key selling point.
In a Buyers’ market I always say price is paramount. But the mantra "location, location, location" is not just a cliché to be ignored, and new research by the National Association of Home Builders yielded a definitive list of the most desired location characteristics that raise property values.
The national database of 60,000 homes from the biannual American Housing Survey (conducted by the Census Bureau and funded by HUD) looked at a "standard" newly-constructed house in four regions plus a major sub-region known as "large California metros" where home prices are far above national averages.
The standard home was defined as being no more than four years old, having 1,850 square feet of living space, two full baths, three bedrooms, a dining room, kitchen and a "miscellaneous" room, basement, garage, fireplace, and "no special (locational) amenity or disamenity." The study looked at what happens when this standard house is placed in different locations in each of the regions.
In a Midwest suburb the baseline house, smack in the middle of nowhere, might sell for $212,137. If the house is near parkland or open spaces, the value rises to $215,510. Place it in a gated community and it’s worth $225,772. If public transportation is nearby, $238,340. On the waterfront? That standard house is valued at $303,760. Rebuild that same house in California and a waterside setting increases the value by 41% to $831,27!. The study related that in every region the value enhancement from waterfront was 43-44% (but on a lower price baseline).
The study also looked at what it called "neighborhood disamenities”. That baseline $212,137 Midwestern suburban house drops to $209,175 if located by "bad roads," drops lower to $205,729 if it has "inadequate shopping," dips to $197,699 if there are industrial buildings in the vicinity, and plummets to $185,805 if there are "abandoned buildings" anywhere nearby. The worst hit in value, in all regions, occurs if abandoned buildings are located within half a block or 300 feet of the standard house. Trash in the area, industrial buildings and lack of shopping facilities are also significant negatives in all regions.
So how’s this for a plan? Find a lovely house by the water, far from shopping and only reachable by a bad road that passes by empty buildings and junk yards. Buy it for a good price and plan on living there until you die, and let your heirs try to sell it!