Every business sector has its catchphrases. “Buy low, sell high.” “There is no such thing as bad PR.” “It’s not a bug. It’s a feature.” Location matters, In real estate, the catchphrase is “location, location, location.” A home’s geographic placement—its location—is so critical that the word alone became a statement uttered by realtors, buyers, and sellers alike.
There are two main reasons that a potential home’s location matters. Conveniently, both reasons can be summarized by two words that start with the letter “P.” (No, we aren’t suggesting you move to Sesame Street.)
A house’s location matters. It is permanent. Its foundation is forged in reinforced concrete and built brick-by-brick or set stone-by-stone.
You can break up with your backsplash or swap out the swan-shaped sink, but you can’t disassemble your house. (Not even IKEA could do that.)
It’s understood that the physical impossibility of moving a house makes its location permanent. That said, consider the efforts expended before you pack a single box.
You collected months of bank statements and provided credit scores from multiple sources. A mortgage originator or bank manager has locked you into an affordable rate. You clicked refresh or checked the mail multiple times a day for your approval notice.
You handled those hurdles because you planned to hang around for a while.
Purchasing a house is one of the largest investments you’ll make in your lifetime. Location matters. You should love the “what” (the house itself) as well as the “where” (the house’s location) since they are inseparable.
Maybe, you scrimped and saved for a 900-square-foot split-level starter home. Perhaps, you fantasized about the French farm style-house in which you will spend your retirement. A house is a big expenditure regardless of where you fall on that spectrum.
The monthly mortgage is only one aspect of the price of homeownership. There is an upfront down payment. The costs associated with relocating (e.g., hiring a moving company, paying for temporary storage for your furniture, or giving Fluffy a few nights at the kennel to keep her from being underfoot).
Considering the two Ps (permanence and price), we’ve established that a home’s location matters. It is critical. Now, let’s look into the factors that make an address sizzle or fizzle.
Seven Signs That the Location Is Fine
It’s time to dig into the details and get a bit specific. We’ll do more than provide a simple list of indicators that your location is in a top destination.
We’ll share with you what the indicators are and why location matters. Then, we’ll show you how to measure or assess the indicators.
Ready? Let’s go.
The first indicator to check into is the safety of the location. A dream home may feel more like A Nightmare on Elm Street if you don’t feel protected within your four walls.
There are abundant free internet-based tools that take compilations of data (e.g., violent crime statistics) and import them into proprietary algorithms to give an area a “livability score.” It’s one way to get an idea of an area’s safety, but one number derived from many unknown sources should not be the only data you use.
Talk to the current residents in a neighborhood. Ask about the existence of a neighborhood watch group. Visit the local law enforcement offices to meet those who protect and serve your location.
Walking around an area at different times of the day can be useful. Are there people out and about? Do you see fire hydrants or notice security cameras? Are the streets lit after dark?
The second indicator of well-located real estate is accessibility. The COVID-19 pandemic shifted towards working from home, but for many, being on the job means being at the job (e.g., nurses, teachers, doctors, and environmental service workers).
Identify bus routes or train stops near the location you’re considering. Note the distance and corresponding travel time involved. Most public transportation authorities have their schedules posted online.
If you plan to use your own vehicle to commute, evaluate the roadways you’ll use. Are they frequently snarled with traffic? Do they require complicated maneuvers to use onramps and offramps? This will be part of your daily grind; make sure you don’t mind.
The third indicator of whether a location is right for you is the perceived fit between you and the surrounding community. Determining this requires familiarizing yourself with the area and determining if the community offers what you value.
If your location is nestled within a gated community, do you think “protection” or “exclusion?”
Do sidewalks teem with strollers, and is it important to have playground summer programs available? Probably not if your family comprises the two of you on the partner track and pulling 60-hour workweeks.
For many potential home-buyers, the fourth indicator of where location matters is the quality of the public school system. Though you may not have children, living in a reputable school district is beneficial, as it signifies a thriving community.
Educate yourself about the local school district. States and commonwealths tabulate and keep public school data (e.g., test scores and availability of support programs). This information is available online.
Add context to your data by getting some in-person interactions. Save the date of the next school board meeting. They’re open to the public. You’ll get a good picture of the district’s focus points and direction.
A variety of neighborhood amenities include grocery stores, after-school tutoring centers, martial arts dojos, coffee shops, day spas, skate parks, houses of worship, walking trails, dog parks, and public pools. They’re another indicator of a lovely location.
Most people will offer a hearty “amen” to nearby grocery stores, automobile repair shops, and a library (or two). Beyond the basics, what comprises an amenity will have different people saying “amen.”
You have adult children who have grown and flown, and you’re looking to downsize. Also, you’re eagerly anticipating the launch of your own doggy daycare. Amenities close to your desired location are public parks and many pet shops.
You’re a couple with a new baby. Public parks may be a win for the future, but not so much the pet shops.
We offer a final thought about amenities; look for quantity and variety. They indicate foot traffic and will draw in newcomers as well.
Is the main thoroughfare (whether a country lane or a four-way highway) populated with businesses? Is there a range of shops (e.g., large chain retailers and small businesses)?
How much future value a location has is a hard thing to predict. When considering why location matters, appreciation, and growth potential indicate a great place to put down roots. (Besides our love of real estate, we also love a fun metaphor!)
In ways similar to a stock market analyst, you can make some predictions by studying variables and identifying trends. Tell-tale variables are job openings, various business operations, and population growth in a given area.
Variables for Appreciation and Growth Potential
The first variable, job availability, means that there are employment opportunities. People are more likely to gravitate towards a location where they can work nearby.
Job openings also mean that a business decides to spend money to purchase or rent a property and pay for “lights on” services (e.g., water, gas, electricity). A business would not do that if they were unsure of attracting workers. They spent hours conducting research before opening up shop!
A variety of businesses in operation is the second variable. That’s a sign of industrial diversification. Why does that matter? The area’s economic health isn’t reliant on only one industry. See, you are like an investment analyst! You are evaluating diversification (of industry types) to spread risk (a downturn in a single industry).
The third variable, population growth, is the easiest to understand regarding its relevance. If people stay put to have children and if individuals are moving in… the location is in demand.
The thing about population growth is that it tends to affect the other two variables. As more people flock to or remain in a location, different and additional businesses become interested.
Why? Selling products and offering services, the linchpins of commerce, are only successful if people are around.
Okay, so you’re not into evaluating variables or tracking trends. Never fear.
Researching the Area
This is the internet’s time to shine (unlike appraising other indicators of a great location, where an in-person or hands-on approach will yield more information). Many websites offer free tools and reports measuring industrial development and demographic shifts.
If you gravitate away from the bias of a commercial website, the U.S. Department of Labor’s website is a neutral choice. There is a wealth of employment data grouped by geographic location available for review.
You still have resources if you don’t have easy access to an internet-enabled computer. Visit the area’s chamber of commerce or a local business that has been around for a while (7–10 years). Describe your interest in moving to the area and ask about the available jobs and whether there are new families moving into town.
The seventh indicator of an excellent location is the lot location.
We have been talking about the indicators for a great location in macro terms (e.g., a state, a city, a town, a borough). Location matters within your carefully-vetted area. It matters where your lot is located.
Most homes in residential areas exist on a parcel of land, which is the lot. Its placement matters, too. A house on a lot at the entrance of a neighborhood has more traffic passing by than a lot on an offshoot street within the same neighborhood.
Outside the parameters of your neighborhood, you’ll want to note the proximity of your lot to public services.
“I want to live next door to an emergency services hub.” “I love the sound of aircraft engines in the morning,” We’re pretty sure no one has uttered those two phrases.
You’re seeking the signs of what makes a location matter. Thus, it goes without saying that you care about signals indicating a location may be in decline.
Outside of a brand-new subdivision, a sign of decline is that there are multiple homes for sale in one area. Do you recall the phrase “rats deserting a sinking ship?” That’s a dramatic way of making our point.
A street full of homes bedecked with “For Sale” signs is not a good sign. Why are these individuals moving on, and why are there so many of them?
Before crossing the location off your list, it’s worthwhile to note how long the homes have been on the market. If a large percentage of them have lingered, that’s a negative sign.
Finally, if you really love the location but many houses have been for sale for months, it’s wise to talk with a local realtor. A real estate website can provide you with some answers, as well.
You may recall we cited business development and a variety of industries as positive signs for a location. For the economic health of an area, they’re great! You don’t want them next door.
Many cities and towns have industrial parks for factories and warehouses. Living too close to them exposes you to pollution, and the noise level tends to be high.
School Is not in Session: Dwindling Enrollment
Use the school district’s website to identify current enrollment and previous years’ enrollment. Another option is to visit the administration office on the local campus and ask for the information.
If the location you’re investigating has a decrease in student enrollment, it’s important to understand why. Think of the correlation between a robust school district and a thriving community that we discussed earlier. The same is true in reverse; substandard schools often indicate a community rife with other issues.
If fewer families send their children to the local schools, it could indicate a problem with the administration and the educators or be due to mismanagement of resources. Possibly, it isn’t a problem with the school.
There could be fewer kids in the classroom because a portion of the community is aging, or more families without children are moving into the area. If you’re looking for diversity in your community, that could be a positive sign instead of a negative sign.
Again, that is why the “why” matters. A bit of research and a few conversations will help you find the answer.
Many housing subdivisions have an HOA. An HOA comprises residents that form a committee to lead initiatives like the upkeep of communal space and to decide what firm to hire for neighborhood snow removal.
However, some HOAs can be overly aggressive. Picture-perfect landscaping and matching flowerpots (for the entire cul-de-sac) could indicate an HOA that operates like a dictatorship, monitoring everything from plant type to seasonal decor.
Can you live without your garden gnomes and holiday flags?
Take a walk or do a drive down Main Street. If several shops are shuttered and if store displays tend to be “Closing Soon” signs, it could be an omen that the area is declining.
All areas go through cycles of downturns and revivals. That said, calling to mind the two Ps (Permanence and Price), is it worth risking the move to a location that seems to be closing down rather than opening up?
Dorothy Gale of The Wizard of Oz was wise when she said, “There’s no place like home.” Since a home is a huge investment (of your time and money), you want to be sure your home is in a location that you love and will continue to love.
This article taught us that location matters and seven signs that the location is fine. Much of that discernment comes from asking yourself questions.
“Do I value what the community values?” Said differently, “Is it my kind of place?”
“Where do I see this place five, seven, or ten years from now?” Said differently, “Is it movin’ on up?”
We realized the red flags that indicate the location may not be home sweet home. Red flags range from dust-covered vacancies to fabulous front yards (that are aggressively similar in style).
Beyond landing the right location, check out our take on additional topics within the real estate market, robustly researched and carefully curated.
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