Even if you didn’t grow up in a real estate family like me, you’ve no doubt heard the question, “What is most important when it comes to real estate?” The answer, of course, as we’ve had it drilled into us countless times, is location, location, location. According to a New York Times article, the phrase has been around since 1929! It’s a question which has been asked so many times, it has become almost rhetorical. However worn out though, it remains just as true today as it was almost 100 years ago.
Over the past two weeks, however, I’ve had two separate homeowners challenge me on this issue. So, I thought I would take a moment to explain why, in fact, location is still the number one value-influencing component in residential real estate.
So let’s get into it.
Let’s think about your house for a moment. If you wanted to, what could you change about your home? You can change its appearance by painting, landscaping, porches, etc. The square footage can be increased or decreased through additions or demolitions. The quality and condition of your home, or even its design can be changed, through extensive remodeling. If your home is on the market, you can raise or lower the asking price. If you live in the county on 1-2 acres, you might be able to purchase an adjoining 10 acres and increase your total land size. You can even change the effective age of your home through thoughtful and well-placed renovations. But the one thing you cannot change is your home’s location (short of paying to pick up the house & move it!). As the location of a home is the one constant, it commands careful consideration in any real estate analysis.
Remember what first caught your attention when you were considering your home to purchase. More than likely, location was one of the most important factors. My neighbor purchased a vacant lot next to me & built his home there because he wanted to be close to his family who lived around the corner. Another neighbor bought their home just down the street because it was near his work and her family. When we purchased our current home, we chose it primarily as it was on a large lot, but close to town, our church, and central to the areas we cover in our appraisal business. We all chose our homes because of location.
Location is vitally important because it influences – and is influenced by – so many aspects of our lives. When we consider a home to purchase, we consider it relative to its school district, tax district, proximity to city centers and amenities, proximity to work, and view – just to name a few.
On my next blog, I’ll get very specific to the Owensboro/Daviess County market. I’ll give a couple of examples of how an appraiser looks specifically at location, and some guidelines we use when choosing comparable sales for an appraisal.