Location, location, location — that’s what everyone says matters most when it comes to real estate. Of course there are other factors that are important: quality, aesthetics, space and amenities to name a few. But by and large, the location rule is a critical one. Where a property is located, and just as importantly, what it’s near, can make all the difference in terms of value.
This is something to take into consideration whenever buying, renting, or selling a property — or making an improvement to a property via community enhancement. Here are some surprising factors that drive values up or down despite having nothing to do with the space itself.
Being close to a grocery store is important, period: that’s why “urban food deserts,” areas without access to fresh food, have low value and are poverty-stricken. So it makes sense that the nicest of stores — like Whole Foods and Trader Joes — would hike up the value of nearby properties, as they attract wealthier, health-minded families.
According to an analysis by Zillow, “homes within a mile of either store [are] worth more than twice as much as the median home in the rest of the country.” Near a Walmart instead? Even that boosts value by 1 to 2 percent.
Are you a block from the train, a mile, or squarely on top of it? This can make all the difference in desirability, especially in cities like New York where most residents commute with public transportation.
A number of studies rounded-up by ULI have found that homes closer to public transportation are valued higher than those that are more of a hike. Interestingly, while stations were undergoing heavy construction or renovation, prices dropped, but once they were finished they appreciated.
Schools are major draws for families with young children. So if a new school pops up in the neighborhood, the demand may increase, and price along with demand. If it’s a well-funded school in a desirable neighborhood, even more so.
Real estate search engine firm Redfin found that people pay $50 more per square footage for property in a good school district. In extreme cases, like San Francisco after the 2007 financial crisis, homes had a $100,000 difference in price depending on school district.
You might assume that neighbors in coffins would spook out buyers. While this may have been the case in the past, proximity to a cemetery does not significantly affect real estate value. Some people actually prefer it for the serenity, scenery and easy parking.
While some price points analyzed by the Wall Street Journal did find that homes a little further out were valued more, most real estate insiders remain unconvinced. Landfills and airports have more people saying “boo” for noise reasons.
Parks and Recreation
Generally speaking, a public park may boost the property value of nearby homes by 8 to 20 percent, HouseLogic reports. A study in Portland Oregon found that by urban parks, values increased by $1,214, by specialty parks, $5,657, by golf courses $8,849 and by natural areas as much as $10,648.
Still, a home near a run-down park may be a hotbed for crime, and for that reason have low property values. When run-down parks are upgrading as part of long-term community planning, though, values go up. One example is Prospect Park in Brooklyn, NY, where the city’s ongoing efforts have driven nearby housing values up from 90 to 170 percent over comparable properties before 1996, to 300 to 600 percent higher between 1996 and 2000.
A new sports stadium raises nearby property values by an average of $2,214; the closer to the stadium, the larger the increase. Still, in the period between when a stadium is proposed and when it’s open, property prices may actually decline due to construction. And even if the real state close to the stadium is valuable, it may come with high traffic and tricky parking.
According to research by CityLab using data from Trulia, stadium neighborhoods can be extraordinarily expensive: real estate near San Francisco’s AT&T Park, for example, are a median of $653 per square foot, 1.3 times the average property value.
All in all, buyers, renters, and property managers would do well to explore what neighborhoods have to offer to understand if they have a goldmine or a quagmire on their hands.