Regardless of whether or not you work in the real estate industry, the phrase “location, location, location,” is one you’ve probably heard an endless amount of times before through movies, TV, and popular culture.
While it’s definitely a phrase we’re all pretty much tired of hearing by now, the reason this real estate cliche has stuck around for so long is because it actually does have some merit to it, despite how many times it’s been repeated.
Although this emphasis on location in real estate might not sound particularly new to you, it’s always worth it to know why a property’s location can be so influential on its value and how you can use it to your advantage.
Making Your Initial Investment
When home evaluators and real estate analysts determine the market value of a home, they take into account much more than just the home itself, and one of the main factors that can affect the value of a property is its location.
There are no two ways about it; a home in a great location will end up being more expensive than a comparable home in a less appealing area. And just like homes themselves, neighbourhoods can appreciate in value over time too. If you want to live in an area that’s already been developed, has close access to desirable amenities, and scores high points for safety, you’ll have to pay a premium for it.
A lot more than just location goes into the pricing strategy of luxury homes. Find out what else comes into the equation by reading about Pricing Luxury Real Estate: What Makes It Different here.
With that said, making a good locational investment doesn’t always have to be extraordinarily expensive from the get-go either. If you’re okay with playing the long game, you can also choose to invest in a home in an up-and-coming neighbourhood that shows a lot of long-term potential. Should your new home’s neighbourhood develop during the time you own your home there, there’s a good chance it’ll increase the overall value of your home too.
However, these types of investments obviously come with a significantly larger amount of risk, as you’ll have to wait to see if those neighbourhood improvements occur before you eventually sell your home. Buying in a great neighbourhood right off the bat somewhat alleviates that risk.
These days, the real estate industry is evolving faster than ever before. Whether you plan on purchasing a home in the near future or not, it’s always in your best interest to stay up-to-date on How To Buy A House in Toronto.
Selling Your Home For More
When it does eventually come time for you to sell your home, any investment you’ve made in your home’s location should reliably pay off. Typically speaking, the larger the investment you made in your home’s neighbourhood, the larger the dividends will be when you sell.
Assuming your home’s location has appreciated in value during the time you’ve owned your home, you can expect to earn a tidy return on your original investment, however, selling your home for its highest possible potential will still take some effort on you and your Realtor’s® end.
You have to remember that your home itself is actually a depreciating asset — over time, weather naturally wears construction and materials construction down, home systems eventually need replacing, and appliances and decor run out of date. With that in mind, you’ll need to at the very least maintain the integrity and value of your property in order to reap any rewards for the increase in value of your home’s location.
Ideally, you should also regularly invest in your property’s form and functionality while you own it as well. That way you don’t have to bank entirely on your home’s great location to earn you profits from your future sale but instead supplement it with various home improvement and maintenance projects.
If you’re motivated to maximize your profits on your upcoming home sale, there are a few things you should consider doing before listing your home on the market. Find out what you can do now to earn even more money from your sale here:
- 5 Ways To Prepare Your Home For A Fall Sale
- 5 Luxury Upgrades That Can Add Value To Your Home
- How To Boost Your Home’s ROI With Landscaping
What Makes A Great Location?
It’s all well and good knowing that homes in more desirable neighbourhoods and communities are generally more valuable, but knowing which features go into a location being ‘great’ is a very different thing — especially if you’re holding out for an up-and-coming area to develop.
That being said, there are a few telling attributes you can rely on to help you determine whether a neighbourhood is great, might be great soon, or isn’t worth your investment. The first being its proximity to covetable amenities.
Is the house you’re considering buying close to major commercial areas or shopping centres? What about hospitals and schools? How quickly would you be able to run out and grab a last-minute ingredient? And, how successful are all of these shops and amenities doing?
Having these types of everyday amenities close by is a huge asset when talking about a home’s location, and most people would be more than willing to pay a premium on a home to have them nearby. But they also have to be regularly frequented or at least increasingly busy. You want those local shops and businesses to thrive around you so that there’s little risk of them closing down or relocating — ultimately the success of these amenities is what will foster the long-term value appreciation of the neighbourhood.
There are many important elements to a home sale that deserve careful consideration. To make sure you don’t miss out on any of them, we developed our home selling guide for your reference. Find out what they are by reading about How To Sell Your House here.
If you’re living in a popular area, however, you’ll also want to make sure your new home’s location doesn’t sacrifice on the comforts of day-to-day life. Is it peaceful (or at least quiet) in the neighbourhood? What are the crime rates like? Does traffic regularly pass by? Is it safe for children to grow up in? Are major roadways, highways, or transit systems conveniently close to you? What are the neighbours themselves like?
All of these talking points contribute to a location’s value too, and will absolutely be discussed by Realtors® at the negotiations table, whichever side of it you find yourself sitting on.
Are you ready to start your search for the perfect next home for you? Start by browsing through my current Featured Listings here, then book a personal buying consultation with me here.