How does location affect your home’s value? From the current condition of your home to the amount of square feet you have finished in your basement, there are all kinds of things that influence the value of your property, but nothing matters more when it comes to the market value of a home than its…LOCATION. You can have the most amazing home with all the bells and whistles, but if your next-door neighbor’s house looks like it’s falling apart and has been condemned by the city, that can spell bad news for your home’s value.
Today, let’s talk about location factors that influence your home’s (or potential new home’s) value!
First, I feel the need to state the obvious. Market value (how much your home will sell for) is determined by the market. That’s it. At the end of the day, your home’s market value is determined by what someone else will pay for it. You may think it’s worth more or possibly less. But its market value is as it is seen through the eyes of others based on many factors, the location being the first and most important one.
- Home values vary by state – It’s more expensive to buy the exact same home in California than in Nebraska.
- Home values also vary by county – Goodhue County, MN had a median sale price of 120K LESS than a home in Washington County, MN in 2022!
- Home values vary by a location’s geographical classification – Rural homes tend to be less expensive than urban and suburban homes that are similar in all other ways.
- Home values vary by lot location within the same neighborhood – Two homes just a few streets away, the same size/style/age, but one is next to the local elementary school, the other an abandoned Super America, will result in two very different market values.
Considering location as a home BUYER: Aside from your budget, location is going to be extremely important. You likely need (and want) to be near your work, school, family, and friends. Most likely you will know if you want to live in an urban, suburban, or rural area and will start your search there. I’ve had clients pass on properties because they are more than 20 minutes to the nearest Target. I’ve also had clients who only will buy a home where they can’t see the closest neighboring house from the front door.
While you can’t predict the future, choosing your new home will be based at least partly on what the neighborhood layout looks like. Do you need a nearby park to walk the dog? How important is it to you to live near a grocery store? Library? Public transportation? Does the home you are considering buying have large amounts of undeveloped land nearby, and if so, what is that land zoned for?
Considering location as a home SELLER: For you, this boils down to pricing your property right. This is where having an agent who is experienced in your area put together a comprehensive market analysis where your home is compared to recently sold homes in the same location as your home. Just as a 1970’s bi-level 2000 sq ft home that’s never been updated will not have the same value as a 1950’s rambler with 2500 sq ft and an in-ground pool, as you can imagine, an oversized corner lot next to an elementary school property will have a different value than a home that backs up to a Cub Foods parking lot.
When a similar property with a similar location can not be located, a skilled agent can make adjustments to the value of another home to determine a market value for yours. For example, in your neighborhood, if your home is nearly identical in style/condition/design/age/sq ft to the one directly across the street that just sold for $399,900, however, you have a newly remodeled kitchen and your home backs up to a small creek and wooded area, your agent will adjust based on the local market and you may end up with a fair list price closer to $429,900. Ultimately the market price is determined by the market, but the location will play a huge role in how fast, and for how much your home sells for.
Currently, my family lives in the Twin Cities south suburbs. If it wasn’t for ex-spouses and child custody agreements, I’d move out into a rural area where you can buy more home for less money. Living 30 min from town where I can see the stars clearly at night sounds amazing. My family thinks otherwise. “OMG MOM! We can’t move in the middle of nowhere! What if the cell service is bad? What if they don’t do Amazon deliveries? How can we live somewhere that Door Dash doesn’t deliver to?!” Oh, the horror!!!! Anyway, stay warm my friends and until next week…!
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