“Location, location, location” is an age-old axiom in real estate. In this three-part series, we look at how the location factor in real estate is changing. While location is still significant when considering real estate values, in many cases the hot spots themselves have migrated to what used to be dilapidated, inner-city neighborhoods. Learn what other trends are developing. (See Part 1: ‘Boomburb’ and aerotropolis’ and Part 2: Sports stadiums a boon to neighborhood living.)
Heather Powell, a recent home buyer in Horsham, Pa., wanted to avoid lengthy commutes to work, congested city life and also live near her three horses that stay on a separate property. For these reasons, location was a top priority in her home search.
Buyers like Powell haven’t strayed far from the golden “location, location, location” mantra in real estate–it’s the locations themselves that have changed and are changing. In the past, everyone wanted what Powell wanted: to be close enough to an urban core for convenience, but far enough away for privacy and peace of mind. But today, revitalization projects around the country are putting once downtrodden, empty city districts back on the location value chain.
In the last 10 years, Brockton, Mass., has seen locations that previously were sleepy or underdeveloped transform into high-value real estate locations. Bernie Hassan, a broker with Briarwood Real Estate in Brockton attributes the bustling growth in part to technology, the Internet and the commuter rail system that now offers residents an easy ride to Boston jobs.
Hassan believes the Internet has played a key role in spreading information about affordable areas like Brockton to people 20 miles away in Boston who otherwise wouldn’t have considered the move. Inner-city revitalization projects also have attracted more people.
“In locations where before we wouldn’t think houses would sell, today we are putting brand new homes,” he said.
Hassan said a developer recently purchased an abandoned multifamily parcel from the city of Brockton to build a row of townhouses worth $200,000 each. Before the crew even broke ground on the project they had all of the properties under contracts with buyers, as well as back-up buyers lined up in case those deals fell through.
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In addition to new development, there’s been a lot of crime cleanup in the core areas, he said. The new development has made people from Boston more willing to commute.
“Location has benefited a great deal by economic growth and technology and a willingness of a lot of people in the community to take chances in what was previously an over-economically challenged city,” Hassan said.
In other cities, buyers are thinking ahead. They’re looking at new developments that presently don’t have much to offer as possible up-and-coming prime real estate locations.
Russell Benson, an agent with Prudential Alliance Real Estate Group in Oklahoma City, recently sold a house to a couple in a location they didn’t even consider at first because it was too bare. But after looking at the progress of other new developments around the city, they realized that the area likely would be bustling with people a few years down the road.
Buyers in Oklahoma City now look at location in terms of the future–and the resale factor. They’re considering what the neighborhood will look like a few years from now, not necessarily the day they move in.
“What may not be a location now might be in five years…that may have a dramatic impact on your home’s value,” Benson said. “Now you have to look at that.”
Benson points out homes he sold in underdeveloped neighborhoods a few years ago that now have much higher values because they’ve since matured.
Sellers, when considering location, are doing just the opposite of buyers in Oklahoma City, he said. “Homeowners call me and say, ‘we need to sell and get out of this neighborhood before it gets too bad.'” They want to be able to sell at the best price, so they’re acting now.
Because of the current growth phase in Oklahoma City, Benson thinks location is even more important because buyers don’t have to make as many compromises as they would in a market where available homes are in tighter supply. Properties sit on the market an average 60 days, and the average price is about $115,000, he said.
He expects the Oklahoma City market to continue to grow as more available land is developed and older neighborhoods are redeveloped.
“Ten years ago you went downtown and there was nothing there–it was not a safe place to be” Benson said. A revitalization project called MAPS enabled the city to build new condos, a riverwalk, a new ballpark stadium, convention center and host of hotels and converted warehouses.
The downtown area of Knoxville, Tenn., also has experienced some downtown revitalization, changing how people view the value of the location. Large downtown properties have been divided into smaller dwelling units, said Jim Lee, an agent with Realty Executives Associates in Knoxville.
“Young families are moving in because they want to live in more of a downtown situation than the suburbs,” Lee said. They want the shorter commute, he added.
He said a development company recently bought an old furniture store in the downtown area and converted it into loft-style apartments. They secured renters for all of the apartments, so demand for that location and style of living is there. Next door to the lofts, another company plans to build a high-rise condo development.
Lee thinks location is more important to buyers in his market today because a lot of people have home businesses so they spend more time in their houses. Also, living in a good school district is among the top considerations.
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