Is It the Right Neighborhood for You?
What is a neighborhood? It could be a city block, a builder's tract, a condominium community, a walled, private association of houses, or a rural road. The homes that surround yours are your neighborhood. Let's look at some aspects of the house-neighborhood connection.
Most people tend to feel most comfortable in neighborhoods with homes in pretty much the same ballpark price as their own. The neighborhood helps dictate the price.
For example, an extremely large house surrounded by smaller ones will not appreciate as much as it would if it were located in a neighborhood of houses the same size. Neighboring houses affect the value of your house. A house with a two-story, $50,000 addition may only bring $8,000–$10,000 more when sold compared to its additionless twin down the street.
Broadly speaking, the smallest house in the neighborhood fetches a somewhat better price than it would bring in an area of houses its own size. In the case of the smallest house, the house's value is pulled up by the price of neighboring properties. It might take a little longer to sell the smallest house, though. Some buyers could be intimidated by the pressure to “keep up with the Joneses.” Others are unwilling to pay extra for a prestige neighborhood and smaller house. Eventually, however, the right buyer does come along.
Edges of a neighborhood are generally not a good housing choice if you are considering profitable resale. The most secure house — that is, secure in terms of price — is the one right in the center of a like grouping of homes. Even a huge condominium community is affected by a nearby office building or industrial plant. The condos on the outer edge will resell for less than those in the middle of the complex.
There is an exception to this rule. Houses on the edge of neighborhoods bounded by woods, parks, or golf courses will sell better than those in the middle of the neighborhood. Those natural boundaries and open spaces are very appealing to buyers.
Unfortunately, you cannot force your neighbors to paint their houses or generally clean up their property. So be wary of buying next door to a handyman special with a junk car parked on the lawn.
A safe investment lies in finding a neighborhood where each person is especially proud of his home. You may think that maintenance is not an issue in a condo community since it is done professionally, but condos have personalities and images, too, and shoddy, haphazard maintenance can ruin resale values. Be sure your condominium is run by a board of directors that oversees and insists upon careful maintenance, and that has money to pay for it.
Some single-family houses are located in private associations that might own a clubhouse, golf course, swimming pool, and sometimes even the roads. Those associations usually have rules about home maintenance, and there is intense pressure on the homeowner to comply.
Good maintenance can add thousands of dollars to the value of older homes. This is especially true if there is a movement toward refurbishing throughout the neighborhood. The properties that are least affected by the maintenance of neighboring houses are country homes in rural areas, where a considerable amount of land separates the dwellings.
A final point about maintenance. In some run-down inner-city communities, newcomers and existing residents have banded together to make their own particular enclave attractive once again. It can be a smart move to buy into such a neighborhood, getting a good price while it pulls itself back up. The trick is knowing whether it is on the way back or continuing to decline.
Are children's toys left in front yards or on the sidewalks where you are looking? Are kids allowed to play in the street? Is there graffiti on the stop signs? Are rural mailboxes dented and rusted? Do pets run free or are they carefully walked and seemingly well trained? Are property boundaries not particularly noticeable or are the majority of yards fenced or landscaped for definition? Are car parts or broken-down washing machines rusting in backyards or are there signs in the grass noting a landscaping service has just been there to maintain the front and rear yards?
It is difficult to place economic value on neighborhood style. However, it is important that you be aware of what styles different neighborhoods have as you go about your house hunting.
Visit the neighborhood you are considering on different days and at different times of day, especially the common rush hours. What looks like a quiet street at 1:00
You may hear highway sounds from what appeared at first to be a quiet development. Traffic sounds will lower your property's value, as will heavy air traffic overhead, train tracks, or the noise of a working rock quarry just over the hill. What about smells? Living near a chemical plant may make life in your house unbearable on a warm summer day.
Take nothing for granted. Spend some time driving around appealing neighborhoods without the real-estate agent. Agents have a habit of choosing the loveliest approaches to property that is for sale. You are looking for the gritty truth.
The very best way to learn about a neighborhood is by talking to its residents. Walk the streets on a sunny day and strike up a conversation with the man walking his dog or the woman watering her lawn.
Ask nonthreatening questions — you do not want to appear as if you are passing judgment on the neighborhood. Here are some examples:
Instead of asking whether there are many children in the neighborhood, ask where kids play. If you are told they play in empty lots or parks or that they cut through to the bike trails in the fields and so on, then you know there are lots of children around.
If you ask if French or Spanish is offered in the elementary schools, you will hear more about those schools than if you asked, “How are the schools?” which might elicit a brief, “Fine.”
If you ask if the tax assessors have been around yet and the answer is “What tax assessors?” you know reassessment has not taken place recently and might be due soon, a process that could raise your property taxes. If the assessor has been by, you will get an earful on those results.
Ask if the town allows basement sump pumps to drain into the storm sewers. That will get you more helpful answers than asking if there are basement water problems in the area, a question that might make people defensive. Residents might answer, “Gee, I don't know; no one has a sump pump” or “No, they don't, but …” and then a full explanation of how various neighbors solve water problems.
Instead of asking if prices are going up in that neighborhood, ask if there have been other houses sold there recently. You may learn what was sold, at what price, and how long it was on the market. You might even find out the original price of the house or houses; such information can give you an idea of how much negotiating room you are likely to have.