A Desired Commodity: How Real Estate Prices Are Affected By School Districts
A Desired Commodity: How Real Estate Prices Are Affected By School Districts
When searching for a new home, what attributes are potential homebuyers prioritizing over others? Obviously the details of the home are important: the square footage of the home, the number of bedrooms, the age of the home, etc. But there are other factors that will influence whether a home is purchased or sold. In addition to considerations like the neighborhood crime rate and the home’s closeness to important amenities, the quality of the school districts in the area also takes top priority and can actually affect the surrounding real estate properties.
More Money For Better Schools
Some families are so particular about the type of school district they enroll their children in that it will single-handedly influence whether or not they look at a home in a certain neighborhood. The home could match every quality they are looking for but, if it is outside of an esteemed school district, they may not even bother scheduling a showing.
The standard for a good school district is so high that buyers are even willing to make sacrifices if it means they can live in an area with a better school. A study done by realtor.com found that one in every five buyers would sacrifice something like an extra bedroom to be in a good district, with one out of every three buyers willing to downsize to a much smaller house.
It doesn’t stop at a spatial downsize, either. That same study found that one person out of every five homebuyers would pay between 6-10% over their original budget, while one out of ten buyers would be willing to pay 20% over budget. Depending on the market, that could be a substantial difference in what a home could ultimately sell for.
Better Schools Can Determine The Price Of A Home
Because homebuyers are so particular about the surrounding school districts, homeowners who live in one of these desired areas can sell their homes at a higher cost – the data clearly shows that people are willing to pay for it. There are two main reasons why a better district has become such a sought-after commodity:
A Focus On Education
The primary – and perhaps most obvious – reason is that individuals who either have a family or who are planning to start a family in the near future want to make sure their children are receiving the best education possible. If a better education means spending more on a home, it’s evident that people are willing to pay more out of concern for their children’s futures.
A More Desirable Property
Some individuals who don’t have children, or whose children have grown and moved on, look to buy a home in one of these areas simply because they will have a better chance at not only selling their homes in the future, but making more of a profit when they do.
This is definitely something to keep in mind whether you will soon be looking for a new home for your family or if you already live in an area with a good school district and are planning to eventually sell your home.
Originally published on David Taran’s website.
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Small Vs. Large Homes: Size Does Matter For The Return On Investment
Originally published on David Taran’s LinkedIn.
Does size really matter? Homeowners often ask the question of what size home will potentially have the best return down the line - small or large?
Will a smaller home give you the best investment? Will a larger home provide you with a greater financial return on investment when you go to sell it in the future? While most homebuyers are focused on the size of the home, they are missing out on one crucial facet of homeownership that is just as important - location.
The physical structure of your home will depreciate over time; it is the value of the land that actually appreciates as time passes. The home itself will not have a direct impact on the increase of land value. Instead, it is these areas that will influence the majority of your return on investment:
Quality of the surrounding school district and neighborhood.
Aside from the physical features of the home, the quality of the nearest school district and the entire feel of the neighborhood are at the tops of the lists for families who are looking to settle down. If the home is in an area that will provide their (future) children with a good education and both themselves and their family with a thriving community to connect with, that will be a desired property.
Proximity to amenities.
Millennials want to buy a home that puts them close to the social and active lifestyle they crave. Seniors want to be close to the essentials - a doctor’s office, the grocery store, the bank, etc. A home’s walkability to certain amenities can have a direct impact on the value of the home.
The size of the home.
From mansions to tiny houses, the ideal size of a home has fluctuated over the years. Once, larger homes were more popular due to their elaborateness and spaciousness. Recently, tiny houses that measured in at 1,000 square feet or smaller became the newest real estate trend. Now, smaller homes are sought after again as the younger generations begin to grow their families.
The Final Verdict: Small Vs. Large Homes
When all of these factors are taken into consideration, it seems that smaller homes offer the greatest return on investment. The down payment is much smaller when compared to larger homes, which means lower debt, and they often come off the market quicker as there is a larger number of families looking to settle on small- to moderate-sized homes.
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Stop Using These Terms When Selling Properties
When people are looking to buy a home, they aren’t just taking the visuals into consideration. A commitment as substantial as buying a home requires more thought, more research, more scrutiny. Every word they read in a listing and every word they hear at a showing will remain in their thoughts to be analyzed later. They will be narrowing down their final choices by not only comparing pictures of their top choices, but by comparing descriptions of each home as well.
There are a few words and phrases that real estate professionals are urging that people cease using when describing a property. Finding the right words may not be a simple task, but avoiding this terminology will ensure that you aren’t setting yourself up for a loss at the onset:
“Good Value”
Saying that your home is a “good value” detracts from all of the important information that you really should be sharing. And this missing information is exactly the type of description that potential buyers want to read or hear. Instead, focus on using words that help to visually paint a picture of the reasons why someone would want to live in the home, with an added emphasis on its physical attributes.
“Luxurious”
High-end, classy, you would think that this word should be included in your description since it eludes to the home being very desirable. When you use the word “luxurious,” you are implying that there is an element of the home that sets it apart. When the buyers come to the home for the showing, they will be searching specifically for that luxurious element. If you use it out of context just to sound impressive, that letdown could ruin your chances of selling the home. This word is so frequently used anymore that now it’s lost its meaning, which means that if you truly do have a luxury home, it may not mean anything to potential homebuyers until they actually come to see the property.
“Freshly Painted”
Before you sell a home, there are renovations that are not only necessary, but will lend to an increase in asking price due to the improvements made. But you need to be selective when you are speaking about the renovations that have been completed. If you only include one renovation, like the home being “freshly painted,” the prospective buyers may interpret that as being the only remarkable characteristic about the home. If you have done more to the home, be sure to mention that.
Put yourself in the mindset of a homebuyer when you are writing or speaking about the home for sale. When you describe it, analyze the meaning behind every word or phrase that is being used and look for any disguised meanings that, when interpreted, could potentially hurt the sale of the home.
Originally published on David Taran’s professional website.
Fresh Luxury | Source
David Taran is the partner of Sunstar Capital, an investment management firm in San Jose, CA. He's spent 25+ years in the industry, developing, constructing, and acquiring properties. Deeply devoted to balancing a healthy work-life balance, David is an avid supporter of Project Happiness, a non-profit organization dedicated to helping others find empowerment through tools, resources, and classes. David lives in California with his wife, Randy.
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