Chapter 5 - Where To Look For A Home

You want to look for a home in a location that is either up and coming or one that is firmly established and in which the housing prices are appreciating in value. You want to stay away from blighted areas that are neglected by the city or area in which they are in. These usually make a poor investment and some even depreciate in value. Although the home will generally be worth more in 10 years than what you paid, the better the area, the more increase you will see in your equity.

Equity is the amount of money that the home is worth on the market less any amount you owe on the home. Your home should appreciate in equity each year. If the market is hot in your area, the equity will rise quicker than if the area is going downhill.

Take a look at the area in which you wish to live and figure out the following:

ｷWhere the growth is occurring

ｷWhere are the most coveted areas in which to live

How To Figure Out Growth

If you are looking to purchase a home in a suburb, as most people are, then you should note where the growth is occurring. Take a look at the city and see where the undeveloped areas are. If you look south of the city, what areas are expanding? Take a map and look at the areas that have expanded over the two decades near your city.

If you lived in Chicago, for example, you would note that the growth was going Southwest and West. The growth was stagnant East of the city and North was pretty much all built up. If you purchased a property North of Chicago, you were going to pay top dollar, but were assured of a stable property value.

If you purchased property East of Chicago, you would see no real change in value. Housing prices did not rise or fall. They were pretty much stagnant.

If you went West, you saw a boom. The growth was going west and if you purchased a home in a suburb like Naperville 20 years ago, you saw the housing prices rise considerably in the past two decades. The same way if you went Southwest to an area like Orland Park.

If you went even further West or Southwest, you were getting property even cheaper and waiting for the boom to hit. In Chicago, a new expressway opened in the South, near the city of Joliet. This enabled growth in the South region as well. If you live in Chicago and were looking to find an up and coming area, you would look to the Southwest or West as that is the growth trend in this area.

Every city has an area where there is a growth trend. In order to see it, you merely have to take a look at a map and see the population differences since 1980 and today and you will see the growth trend. Some areas are leveling off and those are stable areas. Some areas are stagnant and have not changed much in past 20 years. Some areas might even be declining in property value and may be receiving an influx of crime.

Other areas are stable and thriving. In Chicago, this would be the North side of the city. This is a sure thing when it comes to property values.

Which Are The Most Coveted Areas In Which To Live

This is easy to figure out. They are the areas in which the home prices are the most money. Everything in real estate is based upon location. A shack in a good location will fetch more on the market than a really nice home in blighted location. And you are better off to buy that shack than the nice house.

When purchasing a home, look for the best house you can afford in the nicest location possible. If you cannot afford the posh neighborhood or area, settle for the one right next to it. You are better off with a smaller home in a good area than a palace in a blighted location.

Look at school districts, crime rate and median income levels as well as the prices of the homes in the area and how they have changed in the past few years. This will give you an idea on how nice the area is.

If you are seeking to buy a home in a small town, you have less choices. Small town homes have usually the “good side of town” and “the wrong side of the tracks.” You can tell this by simply looking around the town and seeing the poor homes that look dilapidated and the homes that are well kept. Some small towns are all “the good side of town” and some small towns are simply “the wrong side of the tracks.” If you are looking for a home in a small town, look for one that has some sort of industry and is a pleasant place in which to live.

Once you have figured where to look for a home, you can start actively looking in the area. You can do this with a real estate agent or on your own. There are some homes that are “for sale by owner” which will not welcome a real estate agent inside. In those cases, you will have to call the seller and make an appointment. If you decide to purchase the home, you will have to draw up a contract. This will be discussed in a later chapter.