During a real estate boom, buyers will compete almost for any house that comes on the market. This is good while it lasts, but once the party is over, only home owners who select the best locations will have the most valuable property, which will also depreciate at a much slower rate. This variation in value is primarily due to a home’s location. “Location, location, location” is a widely accepted real estate mantra. And it’s sound advice—except for one problem: most people don’t understand what it means.


Key Takeaways

  • The location of valuable real estate is critical.
  • Homes in cities with little room for growth often seem to be more valuable compared to those in cities with plenty of space.
  • Consider a neighborhood’s accessibility, appearance, and amenities, as well as future development plans.
  • The proximity of a lot to things like busy streets may end up making it less attractive for resale.
  • Because land values rise, acreage often takes precedence over house quality.

Why Is Location Important In Real Estate?

First, consider why that particular old saying the three most important factors in purchasing real estate are location, location, and location—became so popular. Many people choose to purchase a property based on how much they like the house or apartment, but when you buy a property, you are also purchasing a plot of land. The house currently set on that land can be refurbished or redeveloped, but the location of the house cannot be changed. This is most evident in residential areas, where the boundaries of an estate are clearly defined. Even if you purchase an apartment in a city, you are investing in a specific location. A city block, like the community of a house, can be a “good” or “bad” investment. This means that site is frequently the single most important determinant of a property’s value. It’s a straightforward case of demand and supply. The number of houses in a desirable location limits the supply of housing.

Buyers and Location

The first is to understand that the majority of buyers  in a given year frequently influence what constitutes a famous place due to their tastes and interests. A “good” location for home buyers typically has good transportation, good schools, and community engagement, The second critical point to remember is that a “good” or “bad” location will not remain that way indefinitely. Cities, towns, and even suburban communities are constantly changing, and communities can go from less desirable to “up and coming” in a matter of years. For example, if a major employer has recently opened near an affordable community, it is often worthwhile to buy in that area.

5 Factors Of A Location

Of course, a decent area could indeed actually mean different things to different people, but there are objective factors that influence a home’s value. You may not even be able to get a house with all of these aspects based on your specific needs and preferences. That’s fine. After all, a house is much more than a financial investment. Give heed to nearby amenities when house hunting. Buyers typically want super markets, laundromat, and entertainment nearby. Consider trains, roads, and public transportation, such as bus stations, subways, and public bike-share locations, for transportation. A home’s value will typically increase if it is close to amenities. However, when looking for a new home, keep the following five points in mind.

1. Centrality

The location of your home in a city or town will definitely affect how much you pay for it. Because land is a limited resource, cities that are highly developed and have little room for expansion tend to have higher prices than cities that have plenty of room to grow. Some of these communities have a large number of vacant homes and areas that have fallen into disrepair. When vast open cities experience a population emigration, the outlying areas typically experience the most severe drops in property value. This is an example of how location affects the fundamental economic principle of supply and demand.

2. Neighborhood

The neighborhood that attract to you will be largely a matter of personal preference. A truly great neighborhood, on the other hand, will share a few key characteristics: ease of access, appearance, and amenities. The size of the lot on which your house is built may also be determined by your neighborhood. In terms of accessibility, look for a neighborhood near a city’s major transit routes with multiple entry points. Many people spend a significant portion of their days commuting to and from work, so a house with easy access to roads and public transportation will be more desirable than one that is tucked away and can only be reached by one route. Shaded trees, quality landscaping, and proximity to parks or community spaces are all desirable. You can also gauge the popularity of a neighborhood by the length of time homes in that area stay on the market; if turnover is quick, you’re not the only one who thinks this is a desirable place to live. A great neighborhood should also have necessities like grocery stores, shops, and restaurants. Most people prefer to visit places that are convenient. Even if you don’t have children or plan to have them, look into the local public schools. A reputable public school district can increase an area’s home values and factor into the profit you can realize when selling. You’ll also want to attract as many potential buyers as possible. Many buyers look for areas with good public schools.

3. Development

Not only do current amenities matter, but so do future ones. Plans for new schools, hospitals, public transportation, and other civic infrastructure can significantly boost local property values. Property values can also rise as a result of commercial development. When looking for a home, try to find out if any new public, commercial, or residential developments are planned in the area and consider how these additions may affect the desirability

4. Location Of Allotment

You should also think about where the house is located. If the house you want to buy is right on a busy road or very close to a highway, you can get it for a lower price, but it will be more difficult to sell later. The same could be said for houses next to or backing onto commercial property, such as a grocery store or gas station, or for houses on streets with unusually high levels of parking traffic and parked cars, such as those near large churches or community centers. A house with a beautiful view or near a body of water, on the other hand, is likely to be more valuable now and in the future.

5. The House You Purchase

 One aspect of buying a home frequently surprises people. Assume you’ve narrowed your options down to two homes in a desirable area. One requires repairs and updates but has a large amount. The other is in excellent condition, but it sits on a lot half the size of the fixer-upper. The prices of the two houses are comparable. Which do you prefer? In most cases, the house that needs work is a better investment. The reason for this is that your home is a bad investment. The lot, on the other hand, will retain (or likely increase) in value in relation to the house. The larger lot would sell for more if both houses were bulldozed. So, if at all possible, choose a larger, better-shaped, or better-located lot over a nicer house. A less appealing house can always be updated, expanded, or replaced entirely, but the lot cannot be changed.

In conclusion

The factors of a good location in real estate are not entirely subjective; in fact, it is determined by a fairly static set of criteria. When looking for a new home, make sure the neighborhood has objective qualities—such as attractive amenities and good schools—that will help ensure your investment appreciates in value over time. There are several methods that can assist you in selecting a desirable home location. If you are considering moving to a new neighborhood or simply purchasing property in one, it is critical to recognize that the locals are an invaluable source of information. Mentioning to someone in a local coffee shop that you are looking to buy in the area will reveal that people are eager to share their knowledge and insights. For the same reason, even if you don’t intend to use their services, it can be beneficial to schedule viewings with a few local real estate agents. They will be able to give you advice on the most desirable (or profitable) locations in the area because they are industry professionals. Of course, they will claim that their properties are all in great locations, so take what they say with a grain of salt. There is no substitute for research once you’ve narrowed down your property or location list to a few candidates. Run the above factors through for each property you are considering. Hence, the key to buy a good property are not consider the factors of a good location in real estate. 

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