Does Neighbourhood Matter when Buying a Home?
Of course it does! But the harsh truth is that most people (including myself) are short-sighted when it comes to purchasing a home. I recall my first home purchase – it was one of the most exciting and nerve-racking experience in my life. After 6 months of searching for our first home, my husband and I finally found the perfect home. It was the right size, the perfect layout, had the right number of bedrooms and baths and most importantly it was affordable. Our main focus was structured on finding that perfect home that fell within our budget. Unfortunately, it was far from what was actually important – the type of neighbourhood that we’ll be spending a good portion of our lives living in.
What doesn’t astonish me after researching on this topic is that studies show that we’re not alone. When looking to buy real estate, first time buyers are not asking the right questions, “who are my neighbors?”, “what is the value of my neighborhood?” “will the value of my house increase based on my neighborhood?”.
So how much time are home buyers spending on researching about neighborhoods before taking the plunge into one of the biggest investments of their lives? Not enough, says Andrew Schiller, founder and CEO of NeighborhoodScout, a website committed to providing data related to neighbourhoods in the U.S.
Remember the old cliché – “location, location, location.!” Well, there is apparently some merit to this saying and some realtors and home-buyers swear by it. “You can always change your house, but you can’t change its location” states Heather Levin. (The Greenest Dollar) . The majority of first home buyers are oblivious to the facts about their neighborhood and who their neighbors are. This is a common mistake made by many and as first time buyers we can attest to that fact.
When I speak of unsuitable neighborhoods – you might think of a house or several houses down the street with over grown grass, rusty garage with paint peeling off the doors and worn-down roof. Of course, this is highly imperative since a lousy neighbor can bring the value of your home down drastically. But, far more substantial than an “bad” neighbor are larger and significant factors such as amenities, crime rate, schools nearby and “what people are saying about that community”. “Most people focus on the house, the layout and number of rooms etc. and only secondarily look at the neighborhood. It should actually be the reverse,” says Schiller.
You can own a fantastic house, but you will find your lifestyle will suffer if the neighborhood isn’t a good fit for you and your family. There are many factors to consider when searching for a neighborhood that fits your needs and knowing where to start can be a daunting task. Here are few things to look out for when you are ready to get on the web and do some research.
Home buyer should be aware of crime rate or the crime history of the area they wish to reside in. People often move into areas that they hear have low crime rates, good schools and low taxes without bothering to verify these facts themselves. Studies conducted in the United States reveal that living in the same neighborhood as a registered sex offender can negatively impact the overall image of the community and drive down the value of homes in that area. Accordingly, a research study conducted by Longwood University, U.S., indicates that living within 1/10 of a mile away from a sex offender will lower the value of your home by a whopping 9%. The point here is that – be conscious – read the newspaper, search for safer neighborhoods and do you research before making the move. Talk to people in the area to see if they have a good neighborhood watch and if they are aware of any recent criminal activities.
Another interesting factor to note is that vacant buildings and absent homes can also drive down the property value in an area. It’s best to do a thorough search online for homes under foreclosure in an area and compare that relevant to the neighborhood statistics. In addition to vacant houses, it’s imperative to search for vacant commercial buildings in your preferred area to evaluate the property value of your potential home. A community that consist of business foreclosures and schools that have been shut down mirror a stagnant community. It’s in your best interest to stay away from such communities and target growing, affluent and prospering neighborhoods.
Another point to address here is zoning bylaws and development plans and how it impacts your home. In Canada, the municipal government takes control of enacting bylaws to control the use of land within boundaries. It’s best to read up on zoning bylaws and the region’s development plan in areas of your interest prior to the purchase of a home. For example, if the municipality has planned to erect more residential homes as opposed to say commercial or industrial buildings, then your neighborhood value is more likely to increase. Similarly, it’s also advisable to be well informed on any budget proposal and political issues that relates to urban development and to keep abreast of federal projects. Similarly, looking out for surrounding land area and usage of land in your preferred neighborhood such as nearby power plants or landfill, will give the buyer an upper hand when it comes time to sell the property. “Homes located near city services lose, on average, 6 to 10 % of their value.” Heather Levin .(US News – How to Analyze a Neighborhood Before You Buy). Likewise, it’s important to independently verify that a certain neighborhood is outside of proposed freeway construction, flood plain or landslide areas, which can drop the value of your home by 15 percent or more.
That being said, there is only one solution to this – get advice and do your own research before taking the plunge into real estate investments. Sit down in front of a computer and do some research, read the newspaper, talk to a few people and get advice tailored to fit your needs. Most people start their neighborhood research by talking to friends and co-workers. Although it’s helpful to solicit advice or suggestions on neighborhoods, consider the source. That friend without kids might not have a good grasp of the schools or children’s activities in his neighborhood and think it’s a fine place to raise a family. Likewise, that co-worker with young children might not have a good handle on the entertainment scene and places for young professionals to mingle after work. Talk to someone who’s in a similar stage of life or the situation in which you will soon find yourself. Be a savvy homebuyer and do your research thoroughly so that you can enjoy your dream home in a preferred neighborhood.