5 External Factors That Affect Home Value
Schools. Parks. Transportation. These are the primary factors that prospective homebuyers consider when making the move in a new neighborhood. "Location, location, location" has been uttered so much that it seems to have lost all meaning. Yet, clichés typically contain a kernel of truth to them and, when it comes to a home, location can determine whether your investment will be a boom or a bust.
So how do you know when a location is going to work in your favor? We all know about the essentials, but what about a cafe? Grocery stores? Parks? Walking around the neighborhood and taking stock of what you see can reveal a lot about the value of your investment.
So what should you be on the lookout for when scouting out a potential neighborhood?
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Starbucks
The world's most iconic coffee shop can be spotted in locations that range from shopping malls in Minnesota to a funeral home in South Carolina and, the closer you are to this ubiquitous franchise, the more likely it is that you're in an up-and-coming neighborhood.
According to a recent study by Quartz, homes within a quarter mile from a Starbucks appreciate nearly 30 percent faster than the average American home. There's a coffee shop effect at play here as cafes tend to raise property values in general, but this proves especially poignant with Starbucks. For example, homes near a Dunkin' Donuts did appreciate faster than the national average, but still didn't come close to the appreciation caused by a Starbucks opening next door.
Bike Trails and Greenbelts
Homeowners have greeted news of new trails and parks with a mixture of apprehension and optimism. The detractors cite concerns about crime and reduced street parking, stoking fears that new paths will devalue their homes. The evidence has shown otherwise.
A case study found that in Massachusetts, homes that were near a newly developed trail sold for 99.3 percent of their listing price (compared to the national average of 98.1 percent) and sold in an average of 29.3 days (compared to 50.4 for comparable homes that were farther away).
In Wisconsin, the effect was even more dramatic: Homes near the Mountain Bay Trail sold faster and, on average, fetched 9 precent more than their trail-less counterparts.
Marijuana Dispensaries
The legalization of marijuana in certain states has been nothing if not controversial. One thing that's not up for debate is its positive correlation with property values.
The marijuana industry provided a boom for local employment (not to mention a new kind of tourist), making demand for housing skyrocket. Colorado, the first state to legalize recreational marijuana, saw their home values increase, on average, by 6 percent.
Street Names
When it comes to your street name, it's all in the suffix. If you thought that "street" and "alley" sound less appealing than "place" or "way," most homebuyers agree. If you live on a "place," "way," "boulevard," or "lane," your home will sell, on average, at a price about 36 percent higher than if your street has a less elegant suffix.
Trader Joe's vs Whole Foods
Trader Joe's and Whole Foods tend to attract similar kinds of customers but when it comes down to where you should live, proximity to Two Buck Chuck wins out.
A 2015 report found that homeowners near a Trader Joe's saw an average 40 percent increase in their property value since purchasing, while Whole Foods' neighbors saw a 34 percent increase. However, residents who have Whole Foods as their neighborhood store pay 59 percent less in property taxes than Trader Joe's customers.