We’ve all seen those lists of “Best and Worst Places to Live”, and while we may have our own opinions, there are several factors that go into determining these lists. Things like crime, income, education, job market, and more can all play a part in where is to be considered a good or bad place to live. What we might not think about is that these factors can also have an effect on home value. So, what makes a place “good” or “bad?” How do these conditions affect home value?
The Best and Worst
The “best” places to live typically will have a perceived better quality of life. While quality of life is sort of a subjective idea, a good indication could be low crime rate, low poverty and unemployment rate, more highly educated, medium to high household income and etc. One example of a “best” place to live as of 2019 is Des Moines, Iowa because its “metro area” meets the wants and needs of growing families. Low crime rate, good quality of health, and short commutes placed this city on the top of the “good” list!
Obviously, places deemed “worst” to live will have attributes opposite those of the “best” places. The best indicators of a bad place to live are high crime rates, high poverty level, lower education level, low income and weak job market. One example of a bad city to live is East St. Louis, due to its concentrated high crime and poverty rates.
Effects on Value
As an appraiser knows, home value in the eyes of the buyer or owner is subjective by their own opinions and preferences. However, as one would guess, “better” places to live will have a better effect on home value, and “worse” places will negatively affect home value. Homes in better locations, generally speaking, have a higher value than those in bad neighborhoods. The conditions in those locations are the driving factors of this effect. Let’s take Youngstown, Ohio as an example of the effects that location has on value. Youngstown is one of the poorest cities in the country. Nearly 40% of the population lives below the poverty line, and over 50% of all households earn less than $25,000 a year. These low incomes are reflected in the property values of the city. The national average home value is $205k, whereas in Youngstown the average home value is $43k.
The good and bad news about these rankings is that sometimes locations will improve through community and government assistance, or plummet by some of the same factors too. As an appraiser, it may be beneficial to volunteer or offer your services towards those trying to improve homes in “bad” areas. For example, going to community public hearings to offer your professional input and improvements about the area or reaching out to nonprofits or government agencies focused on housing and offer your services on valuing those properties for their needs. Whether it’s pro-bono or not, it’ll give you experience in your field while also helping to make your city a better place to live. Keep in mind too that these compiled good and bad lists should not be used as accurate information to make a valuation–especially if the stats are not cited or the info is out-dated. The value of a home should not be chalked up to its area’s reputation alone. Additionally a potential homebuyer isn’t going to solely determine their decision based on a list from the internet. This is where you come into help them get a real assessment based on more than just a set number of statistics.
The post Best and Worst Places to Live: How Location Affects Home Value appeared first on Real Estate Appraisers.