You’ve heard it. We’ve all heard it. Everyone who’s ever gone house shopping has heard it. Location, location, location. Why is that such a thing? Here are the 3 contributors which drive up the price of real estate and bring truth to this age old saying.
Have you found that idyllic home in the ideal neighborhood? Wait, what? There’s a coffee shop around the corner? Oh, I could get so much work done there. And the grade school is two blocks away? Sell the mini(van)! The kids are walkin’! It is just ideal. IDEAL I TELL YOU! So you whip out your phone and pull up the listing price. BAM! Like a Mack truck just hit you, the listing price you keep reading over and over causes your face to turn a pale white and nausea sets in. Que inner self talk. This house?!? This little dinky house? I mean yea it’s cute and in perfect shape and I really like the front door, but really?? There’s no way. Redfin must have it wrong. I mean I’d be willing to pay XXXk but that, that is insane!
The Royal Triumvirate
There are three main contributors that, when mixed together properly, become the perfect elixir which skyrockets real estate prices. Main Street, Careers and Commute Time and Schools. Have you ever seen Indiana Jones and the Temple of Doom? Remember the 3 stones that when Indy would put them together it would cause the diamonds on the inside glow brilliantly? Well, that is how these 3 contributors work. As separate items, they do affect the price of real estate, but they don’t cause the housing comps to boom. When you bring them all together though, it’s like the Bermuda Triangle. Everything becomes hazy, people get lost, and some never make it out alive. All logic, reasonable prices and houses that sit on the market for longer than 24 hours become extinct. Let’s break down these 3 insatiable contributors so you understand why.
There was a time from about the end of WWII up until the millennials started buying houses that people no longer valued the local downtown main street. You know, the place where on a Friday night, you could PARK YOUR CAR and WALK (imagine that?) to dinner, boutique shops, bookstores and catch a film at the local theater. It’s the home of awkward high school first dates, kids with an ice cream cone schmeared all over their face and old men sitting on a bench watching the world go by. You know a place like this? Leave a comment below of your favorite downtown area, I’m interested. My wife and I love to visit these places. I’ve listed my favorites, thus far, at the bottom.
Well, there has been a reinvigoration over the last decade or so to bring back these downtown districts. Why you ask? Because today, in just about every major suburb, you have the all typical big box stores and chain restaurants that are spaced out way too far, which makes you get in your car and drive to each one, and then fight traffic through the 27 stoplights all the way home. Ugh. Millennials, whether you like it or not, are here to stay. And a majority want to live close. Close to bars and restaurants. Close to coffee shops. Definitely close to a grocery store. Heck, even close to their barber. Families with kids ideally want this too. They want their kids to be able to enjoy riding their bike down to the ol’ five and dime (aka Walgreens) to buy a soda pop. It gives them something to do and gives you ten minutes of pure bliss (obviously you’ll be tracking your kid's iPhone while sitting on the couch with the iPad. Parents these days….)
Careers and Commute Time
This is a big factor for sure. In the age where everyone seems to have an office downtown, commute times are getting longer and people’s road rage is getting scarier. Watch out for my wife, Nashville, she’s one of them. The one problem with small to mid-sized cities is that there aren’t a whole lot of public transportation options, which means more cars on the road. Since this is a problem that we’ll have to deal with for the foreseeable future, the ideal commute time is around 20 minutes. (Longer commutes via train or bus are generally tolerated because people can get stuff done on the way in). When people look for a home, they generally first look to see if they can be within a 20 minute drive of their office.
This is the obvious reason for higher real estate prices. Parents always want the best schools for their kids. The bonus they look for is if the schools are within 5-10 minutes from their house so they can drop their kids off, run errands and get to work at a reasonable hour. Schools are lethargic by nature and they don’t change quickly. What you see is generally what you get for the next 5-10 years. So choose wisely. Be sure to visit websites like www.greatschools.org to find the good schools in your area.
Buy for Location
If you’re looking to buy a home but not live there ‘until death do you part’, choose for location. So what if it has a gutter hanging off the side or a tickle me pink tub in the bathroom. That stuff is cosmetic and can be fixed up in due time. You can’t change your location, and when it comes time to sell you’ll be happy you did.
My Favorite Downtown Main Streets (thus far):
- Ann Arbor, MI
- Alexandria (Old Town), VA
- Fells Point, Baltimore, MD
- Traverse City, MI
- Naperville, IL
- Franklin, TN
- Hillsboro Village, Nashville
- 12 South, Nashville
- Evanston, IL
- Oak Park, IL
- Bloomington, IN
- Downers Grove, IL