Location Drives Home Values
While many factors contribute to home values, lot size and square footage, green qualities or the amount of bedrooms but location overwhelmingly influences ultimate value. The National Association of Home Builders (NAHB) analyzed data from the American Housing Survey, concluding where attracts the largest premiums. This study found that homes in large metropolitan areas rake in about 60% more than ones in non-metro regions.
The NAHB used New England home values as a baseline. With that in mind homes in Pacific states reported values about 35% higher than the control. While many areas fall below New England like East South Central and West South Central homes are about 60% lower.
Being in a metro-area is a large factor but where in a city is even more important. “Beyond city boundaries and state lines, the character and condition of the neighborhood itself play a powerful role,” said NAHB Principal Economist Na Zhao. “Buyers aren’t just purchasing a home; they’re buying the experience of living there.” Using a scale (from 1-10) on neighborhood quality, home value increases for every point. For example by moving from a neighborhood rated a “6” to one with a rating of “4” would mean values would decrease by 4% for a home with identical characteristics.
