Where to Move?
Okay, you've figured out what you can afford (wow!) and how much you're going to have to pay back (whoa!). Now it's time to turn that loan into a place to live and find just the right home (yahoo!).
First, you need to find the right neighborhood. That is because you're not just buying a home. You're also buying into a larger community, and what happens outside your door impacts everything from how much you'll pay to how much you'll make later if and when you move again.
Whether your dream home is a cozy cottage on a suburban cul-de-sac or a classy condo in a downtown high-rise, the fact remains: If you don't like the neighborhood, you'll never love your home.
How do you tell if a neighborhood is right for you? First, consider your lifestyle and interests. Where do you work, how do you get there, and how much time are you willing to spend on your commute? When it's time to relax, do you like to walk the dog, browse the shops, or hit the clubs and cafes? Are kids part of the plan - now or later - and are the local amenities for them (schools, parks, safe streets) up to snuff? Prioritize your preferences and you'll find that only a few select neighborhoods fit the bill.
One thing to keep in mind: Psychology experts who have studied happiness argue that you're more likely to be happy if you buy a smaller house with a shorter commute than a bigger house with a longer commute.
Now see how the candidates measure up. Go ahead, walk around and ask the people you meet about local parks and traffic patterns. Get online and research school districts and crime statistics. Learn about the neighborhood and talk to people who live there in Zillow's Neighborhood Pages (start by finding your state here, then navigate to the city and neighborhood). And use the Resources for Buyers page to gather the information you need to make an informed decision.
In business, they say, think outside the box. When buying a home, you need to think outside the walls. As a start, be sure to fill out the Buyer Location Checklist.
Of course, few neighborhoods will meet all your criteria - and even fewer at prices most of us can afford - so don't be surprised if you have to make some compromises. (Everybody does.)
Welcome to the New-berhood
Here's a situation you don't want to see: When Marcie bought her first home several years ago, she loved the fact that most of her neighbors had lived there for decades - they all knew each other, they'd watched each others' kids grow up, and many even worked in the same plant on the other side of town.
At least, that is, until the plant closed, property values plummeted, and For Sale signs began to sprout like mushrooms. Like many people, Marcie had bought her home for both its livability and its potential for long-term appreciation - now neither looked too promising.
Clearly, most homebuyers purchase a home because they believe they'll enjoy living in it, but smart homebuyers also buy for the future; i.e., as an investment that will appreciate over time and produce a profit when it's time to sell. And while it's hard to think about selling your home when you haven't even bought it yet, remember that the average American moves as much as seven times in his or her lifetime. You probably will, too.
So, think about it: When you're ready to move on or move up, and potential buyers come to look at your home, would you rather they drove past junk cars and boarded-up storefronts or well-kept homes and vibrant businesses? Predicting the future of anything is tricky, but when it comes to neighborhoods, there are definitely clues.
Signs of the Times
Many "macro-economic" factors can influence whether home values go up or down. Among the things to consider:
- Constant construction. A new urban-village-style mall a few blocks away can increase your home's worth by tens of thousands of dollars; a six-lane highway through the former pasture next door, not so much. Check with the local planning commission, or just ask around.
- Business decisions. If a factory shuts down, a whole town can be at risk, along with the local housing market.
- Too many For Sale signs. Are people selling because of a change in lifestyle (a new job, kids in college, changing interests) or because the neighborhood has taken a turn for the worse? There's no harm in asking.
- Too many rentals. Even the neatest, nicest renters rarely treat their living quarters as if they owned them - and absentee landlords are often no better. And make no mistake: Neighborhood deterioration is a contagious condition.
In the end, neighborhoods are always changing - slowly or quickly, for better or worse - and house values change right along with them. So when you're house-shopping, look for one that you'll consider a comfortable home today and a smart investment tomorrow. Sign the papers and, as a new homeowner, you'll be part of a community of people, as well as a stakeholder in a neighborhood with a past, present, and future.
We've all heard the phrase, "location, location, location," but many people don't realize that it means more than just choosing the right neighborhood. In large developments, for example, homes near the center of things often command a premium over those closer to nearby roads and businesses. And even on individual streets, houses in the middle of the block often offer better long-term value than those on heavily trafficked corner lots.
A Word on Turnaround Neighborhoods
It happens all the time: A once-rundown neighborhood suddenly blossoms with new restaurants, hip nightclubs, and other trendy amenities. People flock to the area, many lured by the affordable real estate, which, alas, quickly becomes scarce and exceedingly pricey. Prospect Heights in Brooklyn, Patterson Park in Baltimore, Columbia City in Seattle - residents, new and old alike, love their turnaround neighborhoods.
So, should you consider buying a home in one? Yes, but carefully. Buy too soon and the expected renaissance could fizzle; wait too long and you risk being priced out of the market. There are no guarantees, of course, but the best strategy is to go slow while researching the area, then move quickly when conditions warrant. And, if that's not feasible, consider broadening your search to the surrounding neighborhoods, which just might be experiencing a slower, more steady upward tug.
Next article: Buyer Location Checklist
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