How Neighborhoods Influence Property Values

Purchasing a home that declines quickly in value can place a homeowner in an underwater mortgage situation. This situation lowers net worth and makes it difficult to relocate or adjust to a lowered income. The neighborhood is one of the biggest factors determining whether a home will fall or rise in value.

Areas that hold home values well usually have good access to jobs and amenities. Along with several other criteria, these two factors can help homeowners and prospective buyers get a better idea of where a particular neighborhood is heading. The most important factor determining values in an area is nearby employment opportunities. Neighborhoods close to high-paying jobs usually fare better. However, homes close to factories, retail stores and other places of employment usually hold their values. Keep in mind that some expensive neighborhoods may be in quiet places with no businesses in the immediate area. However, they do have freeways or other ways to easily access good jobs.

When an area has long-term job opportunities, the following signs are often present:
-Seats of state or federal government.
-High household income in the area.
-Research facilities are nearby.
-Large colleges or universities are close.
-There is a low unemployment rate.
-Creative industries are nearby.

The BLS offers statistics about these features on their official Web site. The Current Employment Statistics page and the Local Area Unemployment page are two very important subjects to research on this site.

As mentioned before, amenities are also important. An amenity can be any asset that people find desirable. Good school ratings, low crime rates, parks, stores, nice views, interesting architecture, libraries and other desirable places are all considered amenities. However, these features alone cannot guarantee great property values. This is especially true for neighborhoods with poor local economies.

When shopping for homes, it is important to look at the neighborhood after touring the home. Look at the features, and try to determine where the area is heading from gathering information about the local economy. Make sure the neighbors take care of their properties. If the home for sale is the only attractive property on the block, it is best to keep shopping. Do not simply drive by the property during the day. Driving through the neighborhood at night is also important. Some areas are poorly lit or have loud activities going on in the evenings. Be sure to also tour the area on the weekend days and evenings. Some properties are shown at the best times. For example, a nearby factory or sewage treatment plant may emit foul odors for long periods of time on certain days.

It is difficult to shop for homes in cities that have bad overall outlooks. However, buying a home in a neighborhood that has good schools, jobs and other bonuses can mean a rising home value despite the falling values in surrounding metro areas. When considering home values, it is best to avoid looking only at recent numbers. Look at the property values over the past 20 years. Looking at the past 10 years will likely show the rise brought about by the housing bubble. However, many homes had shaky or falling values before that time. Considering these suggestions can help buyers make better decisions and get into homes that will not put them in underwater mortgages.

About Brian Hendricks

Brian Hendricks is the President of Fidelity Insurance Group. Brian started Fidelity in 2003 with 0 clients. Today Fidelity Insurance Group is a Premier Independent Insurance Agency in Florida with over 3,000 families and businesses insured. Brian currently serves on advisory boards for 2 of the largest property insurance companies in Florida. Knowlege, Integrity, and Committment are his and his agency's guiding principles.
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