Why Neighborhood Matters When You're Buying a Home

Why Neighborhood Matters When You're Buying a Home

To find the perfect house, you have to find the perfect neighborhood — no small feat, especially if you’re moving to a new area and can’t distinguish one enclave from another.

How can you tell if your neighbors are friendly, and why should you care about good schools? Here are 10 things to scout:

1. Rising Home Prices

Climbing home values is one of the biggest markers of a great neighborhood. But home prices are ticking up across the U.S., so what constitutes a good growth rate?

The median price of existing single-family homes hit $232,100 in the first quarter of the year, up 6.9% from a year ago, according to the National Association of Realtors. With that benchmark in mind, consider a place where home values are increasing at a faster rate than the national average.

2. Growing Household Incomes

There are advantages to living in a neighborhood with healthy household incomes, says Rae Wayne, a real estate agent and founder of the Bizzy Blondes team in Los Angeles. Mainly, when homeowners earn more money, they can afford to make more renovations to their house, which in turn boosts home prices for the neighborhood as a whole.

You can use Census data to find the median household income in a prospective neighborhood. Keep in mind the median household income in the United States was $56,516 in 2015, up 5.2% from 2014, the Census reports.

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3. Diversity

State and federal Fair Housing laws impose restrictions on what real estate agents can and can’t say when working with homebuyers. One thing they can’t comment on is a neighborhood’s demographics, says Sarah Findel, a real estate agent in Holmdel, New Jersey.

If that information is important to you, Findel recommends homebuyers check online resources, like Census data, to get an overview of an area’s demographics. A simple Google search within the new zip code(e.g., “Synagogues in Pleasantville” or “Latino cultural centers near me”) can help you assess whether there’s a significant presence of a particular community.

4. Great Schools

Even if you don’t have kids, schools significantly affect a home’s resale value, says Findel. One Realtor.com survey found 91% of prospective homebuyers said school boundaries were important in their search.

There’s no shortage of school ratings online, but the data can be narrow. GreatSchools.org, for instance, compares test results for all schools in the state, which the site admits is a limited snapshot of school quality.

To get a more comprehensive picture of a school district, Wayne recommends looking at everything from graduation and college admission rates to AP enrollment and SAT scores. And if you’re truly committed to finding a neighborhood with great public education, go to see schools in person.

5. A Close-Knit Community

Unless you’re OK living in a bedroom community (as in, where residents simply eat and sleep), you’ll want to find a place where neighbors interact. One simple approach is to go knocking on doors.

“Don’t be afraid to talk to people who live there,” says Wayne. “Go to the local grocery or the local coffee shop or the local parks.” See whether the town organizes community events, like a farmer’s market, Labor Day parade or neighborhood block parties.

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6. A Healthy Ratio of Owner-Occupied Homes to Rentals

The average ratio of homeowners to renters in the country is 2-to-1, but you want to find a neighborhood where there are significantly more owner-occupied homes. Why?

“Homeowners generally take more pride in their house’s appearance than renters,” says Findel, which is important for resale value. “If the other houses on the block have broken shingles or paint peeling or even un-mowed lawns, it can affect how prospective homebuyers see your property.”

According to industry estimates, you want to ideally buy in a community where less than 25% of homes are rented out.

7. An Influx of Jobs

The strength of the local job market directly affects home prices, so you want to buy in an area with a low unemployment rate. Even better: Buy in a neighborhood where there is above-average job growth, like towns where big employers are moving in. High-growth job centers are driving the hottest neighborhoods of 2017, a recent Redfin study found.

8. Good Walkability

If you live in a larger metro area, access to public transportation is important, but so is finding a neighborhood that’s within walking distance to shops and restaurants. In general, “busy neighborhoods become more expensive over time,” says Wayne.

In addition to moseying around the neighborhood yourself, check out how the locale fared on WalkScore.com, which rates walkability based on proximity to restaurants, coffee shops, grocery stores, schools and parks.

9. Safety

Federal Fair Housing laws prohibit real estate agents from commenting on neighborhood safety, so get a better picture by speaking with residents. You can also visit sites like SafeWise.com and NeighborhoodScout.com to see crime reports for a particular neighborhood. A more direct approach: Talk to the local police to see what crime is like in the area, says Wayne.

10. New Home Construction

When homebuilders descend on a particular location, it’s a sign of a hot neighborhood, says Findel. Growing demand among homebuyers also typically leads to an increase in home prices — which is always a good thing to see when you’re searching for a great place to live.

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