When you buy a home, you’re also buying the neighborhood surrounding it. The neighborhood is important not only because you’ll have to live in it but also because the neighborhood’s quality will have a big impact on the appreciation value of your home. Before you start hunting for an individual house, you should hunt for a neighborhood that meets your tastes and needs.
Characteristics of a Good Neighborhood
In part, the traits that make a neighborhood good or bad depend on your personal tastes and needs. You may prefer neighborhoods based on qualities such as:
- Type of people who live there: Are they similar to you in terms of age and occupation?
- Commuting distance to good jobs: Are there offices nearby? What mass transit options exist?
- Presence of young families: Do children play freely in the neighborhood?
- Shopping, exercise, and leisure needs: What stores and facilities are nearby?
Other factors are common to all “good” neighborhoods no matter what your personal preferences:
- Strong, diverse local economy: A town in which most jobs are dependent on a single industry or factory does not have a diverse economy.
- Strong housing market: A strong housing market should have a vacancy rate below 5% and rental prices close to the cost of owning a comparable home.
- Good school system: School-system quality is important even if you never plan to have kids because a good school system raises home values.
- Low crime rates: Crime should be the exception, not the norm.
- Services and amenities: The neighborhood should feature multiple amenities, including parks, parking, restaurants, and supermarkets. It should also have reliable public services, such as garbage pickup, sewage, recycling, and emergency response.
Good neighborhoods can be expensive. If you can’t afford a “good” neighborhood, keep an eye out for “up-and-coming” neighborhoods that are affordable but have rising prospects. Up-and-coming neighborhoods typically lie on the outskirts of good neighborhoods that have been established for a number of years. Up-and-coming neighborhoods tend to have specific statistical traits:
- Increasing population
- Multiple offers on homes being sold
- Residents renovating or moving into bigger houses
- A shift from renters toward homeowners
- New businesses opening
How to Research Neighborhoods
Many resources are available to help you evaluate neighborhoods.
- Internet: Many websites, such as Yahoo! and MSN allow you to find and compare crime statistics, school scores, and demographic data for virtually any city, town, or suburb in the United States.
- Local resources: The local library and chamber of commerce should have a lot of pertinent data about the area. Local periodicals should give you a good sense of both the news and cultural events in the area and local issues and politics.
- Local professionals: For a few hundred dollars you can hire an appraiser to assess the likelihood of home-value appreciation in a specific home, street, or neighborhood. Also, you can usually get housing statistics on sales prices from local real estate agents.
- Residents: No one knows a place like the people who live there. Talk to them. Ask about the schools, amenities, local government, crime—everything.
- Visits: Visit the prospective neighborhood a number of times: in different weather, at different times of the year, and at different times of day. Drive the commute from the neighborhood to your work. Act as if you live there. Try the place on.