In a world of imploding home prices, can homebuyers find neighborhoods where values will not fall?
Many buyers today are fixated on price. But such tunnel vision can be shortsighted.
“You may get a good deal on a home in an area where prices fell deeply, but it will take longer for prices to recover,” says Pat Kline, a broker with Avery-Hess Realtors in Springfield, Va.
Instead, look beyond price to qualities that keep neighborhoods attractive to buyers over the long haul. Try to match your own lifestyle priorities with a solid choice of community.
“It’s important most of all for people to look for a neighborhood they love and will enjoy for the long term, because that’s the best way to make sure you get value from your home,” Kline says.
When looking for good neighborhoods, keep the following in mind:
Search healthy ‘move up’ neighborhoods
“The most desirable areas tend to be close to a city and are often well-established neighborhoods,” says Ben Hoefer, a real estate agent with John L. Scott Real Estate in Seattle.
In the Seattle market, neighborhoods with slightly above-median prices that appeal to buyers on their second or third home purchase have held onto their value during the housing downturn, Hoefer says.
“Buyers should avoid areas with a lot of foreclosures because it may take longer for those homes to regain their value,” Hoefer says. “Areas with a lot of first-time buyers were hard-hit because they did not have a lot of equity in their home and were faster to default. It’s better, if you can afford it, to buy into a ‘move-up’ area, although not necessarily a super-expensive neighborhood.”
Liz Sidorowicz, a broker with Re/Max Signature in Chicago, says areas with long-term residents — where many owners have lived for 15 years or more — are likely to be more stable and see fewer foreclosures.
Consider commute times and public transportation
Not every buyer wants to live close to a city. But some suburban neighborhoods can be more vulnerable to price drops.
Kline says prices dropped dramatically in distant suburbs of Washington, D.C., in part because the long commute times made these homes less desirable.
“A Realtor can show you statistics for different neighborhoods, so you can see which ones fared better than others,” he says.
Sidorowicz also says that proximity to public transportation is valuable.
“Anything close to a train or metro line, whether you are in the suburbs or in the city, will keep its value,” says Sidorowicz. “Also, look for communities that are convenient to major employment centers because there will always be a larger pool of buyers looking in that area.”
Investigate neighborhood amenities
Look for communities that have a lot of amenities.
“The more varied amenities you can find in a community, the better it is,” Kline says. Communities that offer tennis and basketball courts have a stronger value than places where you have to drive 20 minutes to get to anything.
“People want to live close to things like parks, libraries and shops, and they would prefer to walk there rather than drive if they can,” Kline says.
Check out the schools
Homebuyers should look for a neighborhood within a good school district, even if they don’t have children. Families always want to purchase homes in such neighborhoods.
Due to Fair Housing laws, real estate agents cannot discuss whether schools are good or bad. However, consumers can find test scores and other statistics on school district websites and school reviews on the Internet.
Know the local crime rate
Crime rates also influence neighborhood values. Look at police district websites or call the local police substation to ask about crime statistics for individual neighborhoods, Sidorowicz says.
Hoefer says it’s important to look at crime trends: “You do not want to buy in an area where crimes of any kind are increasing.”
In areas with improving crime rates, it may take time for perception to catch up to reality, Hoefer says.
“Buyers need to realize that the stigma of a high crime rate can last a long time and hurt property values, even after crime has dropped,” he says.
Gauge the neighborhood’s curb appeal
The physical appearance of a community can be a strong indicator of its stability.
“If there are too many places in disrepair, that can be an indication of a lack of pride in a community,” Kline says. “Places that are well-kept and have some landscaping and fresh paint indicate an area where people will work hard to maintain the value of their property.”
Find out about future development plans
Learn about future development plans that could have a negative or a positive impact on property values. Talk to real estate agents and research government websites to track down such information.
“There may be a little risk in relying on a revitalization project to improve home prices, but this can be a way to get in on the ground floor of an improving area,” Kline says.
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