real estate

How a neighborhood holds property value

A track record of rising home prices
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A track record of rising home prices

Consistently rising home values over the long term is a key sign a neighborhood will protect residential property value. The critical phrase there is "long term," Schiller says.

He says looking at recent numbers can be misleading, especially since they're likely to be heavily influenced by the recent boom and bust in the housing markets.

"You don't want to look at only one quarter. One quarter can tell you, 'Is it raining today or is it sunny today?'" he says. "But that really doesn't tell you about the climate. You want to know, 'Does it rain all the time here?'"

To do that, he advises potential homebuyers to look at property values and comparables going back at regular intervals over the past 20 years, predating the housing bubble.

"When some people look at the last 10 years, some areas look like they went crazy high," he says. "And when you look at the last two years, they look like they fell through the floor because they bubbled."

Many websites can give you appreciation rates and median sales prices for homes you're looking at, including NeighborhoodScout.com and Trulia.com. A real estate agent also may be able to furnish those numbers.


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