As the saying goes, the three most important factors in the desirability of a property are “location, location, location.” This saying really does hold a lot of truth. Just think, when you are searching for a new home one of the first things you do is narrow down which areas you would consider living in. While there are other factors to consider, often the single most important component is where the home is located.
Let’s take a look at some of the reasons why the location of your home is so important:
Proximity to Daily Tasks
There is a lot to be said for living close to work, since you typically drive to and from there 5 times a week. Commuting costs are absurd if you really break down the numbers. The financial blog www.MrMoneyMustache.com uses some reasonable assumptions to calculate just how much it costs you to commute. They estimate that each mile you live from work costs you roughly $795 per year in driving costs and lost productivity time. So that means if you moved 10 miles further from work you are essentially taking a nearly $8,000 pay cut! You can read more about the numbers used and the author’s reasoning on his blog post: The True Cost of Commuting.
Work isn’t the only thing you want located nearby. Other places you go to often, such as the grocery store, gym, or children’s schools should be near by. Shorter trips to these places help reduce stress and frees up more of your time. Sometimes living close to common destinations can allow you to forego the car altogether. If destinations are within walking/biking distance you can save gas and get some exercise at the same time! You can use Walk Score to see how walk-friendly a property is.
Taxes & Utility Costs
Area mill rates (“The amount of tax payable per dollar of the assessed value of a property”) vary quite a bit from one municipality to another. The property taxes on two identical homes in two different areas could be hundreds or even thousands of dollars apart. When trying to determine your property’s taxes you need to consider the property’s taxable assessed value and the mill rate for that area. So for example, a home with a taxable assessed value of $250,000 in an area with a mill rate of 20 would have a property tax bill of $5,000.
Utility costs are another element to consider. What you pay for gas, electric and water services will vary from area to area. You can check the WPS and WE Energies websites for their service areas and rates. These costs may not be as drastic as area mill rates, but recurring costs can add up over time so it is best to have at least an idea what they are before purchasing. It is especially important to know if the property has access to municipal sewer or water. Needing to install an on-site septic system or dig a water well can add thousands of dollars to the overall cost of your project.
Schools & School Districts
Not all schools or districts are created equal. What school a child attends can have a significant affect on the student’s academic, and future professional success. School rating websites such as www.GreatSchools.org are a great resource to start your search. Interviewing school administrators and talking to other parents will also give you great insight into the quality of a school or district. Obviously school district is not a relevant factor for some homebuyers, such as those without school-aged children or those opting for private school (although proximity would still be a factor).
Family & Friends
Established relationships can sway decisions on what locations are considered desirable. Many people wish to remain close to family and friends, so greater consideration may be given to an area that allows them to keep those relationships close. This factor is really an extension of the proximity factor, however its significance warrants noting it separately.
Privacy, Open Space, & Special Features
Characteristics of a property such as privacy, space and special features are obviously factors as well. Larger lots offer increased privacy, but often require you to be further from a city, as land becomes more scarce and expensive the closer you get to populated areas. Lots at the end of cul du sacs cut down on traffic around your home, which gives you additional privacy as well as a safer atmosphere. Other special features such as mature trees, a sloping grade, or a water feature typically add to a property’s appeal. All these characteristics tend to increase a property’s desirability, but at the same time also increases its price.
The factors above vary in priority for each individual and there are often trade-offs needed to determine the “best” location for your new home. Property prices are based on the number of desirable factors the lot has to offer, so it is important to know which factors are important to you and which factors aren’t.
This post was written by Greg Drusch