7 Neighborhood Factors That Impact Home Values

In real estate there’s a famous saying: “Location, location, location.” It’s no secret that the area or neighborhood that a home is located in will greatly impact the value of that property. While a neighborhood’s access to coffee shops may be appealing, there are other factors that can impact home prices in the area. 

Many homebuyers put location close to the top of their list of important qualities to consider. However, a neighborhood’s impact on home values is important for the people who already own homes, too. Neighborhoods are constantly changing, and if your home value increases or decreases because of its location, it could impact the sales price you get for your home when you’re ready to sell, as well as the price you pay in property taxes every year. 

Whether you’re getting ready to sell your home or browsing homes for sale, these seven neighborhood factors can have a notable impact on home prices. 

School districts are one of the driving forces of a neighborhood’s desirability. Young families with school-aged children will inevitably consider the quality of the public school system in which they’re moving. 

“A given buyer could nix entire towns or neighborhoods based only on the school district,” Sean Johnson, a Southampton, New York-based real estate agent, said. “Even despite loving the look or feel of a home in that area.” 

Similarly, proximity to better-ranked public schools will drive demand in that area, thus pushing prices higher. Homes.com can help homebuyers find highly rated schools in any area they’re considering moving to. 

Just as a good school district can drive home prices up, high crime rates can cause property values to plummet. Crime rates can sometimes be hard to determine, but there are numerous online tools that you can use to figure out if an area is right for you and your family. 

Every listing on Homes.com includes the area’s Crime Score, provided by CAP Index. You can use Homes.com’s neighborhood search to view detailed information about each location, including crime and safety data. 

Additional online resources include Family Watchdog, which allows you to see a map of registered sex offenders in a given area. Meanwhile, the FBI’s Crime Data Explorer can show you reports from across the country, your state, city, or an area where you’re considering moving.

“A young family looking for activities, social interaction and amenities may opt for a more close-knit neighborhood with proximity to a town or village,” Johnson said. 

Many households find great value in being close to parks, recreational centers and community facilities. When these amenities and facilities are well taken care of and frequently used by members of a community, there’s even more value to living close to them. 

“Amenities and facilities are definite factors, especially in growing regions, that can drive population growth and home sales quickly,” Johnson continued. “Young professionals have flocked to cities like Milwaukee or Austin largely because of a culture that has new and valuable amenities, facilities and opportunities.”

If you’ve ever driven through a neighborhood where it’s clear that everyone takes care of their homes, you know just how much of an impact it can have on the general vibe of the area. When people take care of their properties, it can drive up what area homes might be worth. On the flip side, numerous derelict homes in an area may make the neighborhood less desirable to people looking to move. 

“If a neighborhood has one neglected property among a sea of desirable homes, buyers could see a valuable opportunity and return on investment,” Johnson commented. “If an area grows to have 25 percent or so of its homes in an abandoned state, with no sign of a turnaround, value plummets quickly and inevitably.”

Your property’s access to transportation and highways will impact what the home is worth. However, home valuation can vary depending on real estate market conditions and the area where the home is located. 

Johnson’s clients are buying and selling in a car-dependent vacation town where residents try to get away from noise. As a result, proximity to highways will typically decrease the value of a property. If an area is home to lots of commuters who want to be fairly close to a highway, that proximity could make a property more desirable, as long as it’s not right up against major roadways. 

“Access to other forms of transportation absolutely adds value in city or city-adjacent areas,” he noted. “But holds less value in suburban areas where public transport may be less utilized or less convenient.” 

The impact of nearby businesses and job opportunities on home prices depends on the area’s demographics. For a typical urban location where people want to be close to their workplace, the level of industry will impact property values. In an area with lots of retirees, for instance, peace and quiet will be of greater priority, thus influencing home values more than local businesses. 

“Retirees in search of a vacation home could lean toward a quieter, more spread out option off the beaten path,” Johnson said.

A strong sense of community in a neighborhood may not always be a must-have on homebuyers' wish lists. However, it certainly can increase the property value of homes in the area. 

Some neighborhoods may have organized associations with regular meetings and events such as block parties. Others might have community gardens or informal community-building initiatives. These could include weekly park meet-ups in the summer, tool sharing programs, neighborhood watches, book clubs and other networking groups. 

“A discerning buyer will explore a neighborhood to gauge the feel of its community and base their opinion on first or second impressions,” Johnson said. “They might even talk to others in the area, check out a local newspaper – form an opinion based on whatever exposure they can gain access to. A good agent will also help educate a potential buyer on that sense of community via experience or proper research.”

Buyers who prioritize a strong sense of community might want to consider renting or buying in an intentional community such as an eco-village, co-housing community or co-op. 

As a homeowner, you are invested in how your neighborhood impacts the value of your property and similar homes in the area. One of the easiest ways to ensure your home’s appreciation is simply by maintaining it well. Keep up with yard and exterior maintenance, replace outdated systems and maintain your home’s energy efficiency. When everyone works together to keep their homes in good shape, the entire neighborhood benefits. 

Another way to take part in maintaining your neighborhood’s value is by participating in neighborhood initiatives. Even if you aren’t on your neighborhood association’s board, attending events, taking part in neighborhood clean-ups and spring planting in the community garden can all make a small difference in the value of your neighborhood over time.  

Where you live is just as, if not more, important than the home you live in. With a little bit of research, you could be on your way to finding a dream home in the area that’s right for you. As a homeowner, it’s important to consider the factors that will influence your property’s value over time. Your home is a financial asset that can be impacted by area crime, school districts and access to transportation. 

Whether you’re in the process of buying or selling, your real estate agent will be able to help you figure out how a specific neighborhood impacts home prices, and what living in an area is going to be like.