Anyone who’s ever longed for a fabulous new home knows location is key. The condition, size and style of a home are significant factors too, but a zip code can either add or subtract value. Zip codes can give you much more information than just knowing the city or county a home is located in because zip codes are more location-specific. By comparing several homes in a zip code, you can get a good idea of the average price of a home. It can’t tell you the specific price of a home alone, but it can tell you whether a home’s location is desirable or undesirable.
School System
All homes within a particular zip code generally have access to the same school system unless they are located on a city or county line. Excellent school systems can greatly increase property values, while failing school systems tend to drag down home prices. The reason for this is simple: parents with children are willing to pay a premium to ensure their children get a good education, so the costs of homes in good school systems tend to steadily increase. Try looking up the zip code for the home on a zip code locator, then determine which school system serves that zip code. Read reviews of the school system and see if this is a system which parents are competing to get into or are running to escape.
Location Quality
A zip code can help you learn a lot about a location’s quality of life and geography. For example, a home in a zip code near the ocean, lake or in a mountain setting will typically sell for more than a location that is not near beautiful scenery. Plug the home’s zip code into a map or zip code locator and see what amenities are nearby. If the home is rather isolated, its value might be lower, but if the home is near a hot vacation spot or lovely body of water, the home could be highly valuable. You can also find out about crime rates by zip code.
Crime Rates
Areas that tend to have higher crime generally have lower-valued homes than areas with low crime. Sometimes a lovely neighborhood will be nestled in the midst of a high-crime zip code, and this can substantially lower the cost of a home. Try plugging in a zip code into a crime report lookup tool and look at crime statistics. Compare these crime statistics to other nearby areas. If crime is higher in the zip code you’re looking at, property values will probably be lower.
Urban vs. Rural
When all other factors are equal, zip codes located in or near large cities tend to boast homes that are more valuable. This is because large cities offer easy access to jobs, services, shops, dining and entertainment, but rural areas often require considerable driving to get access to these same items. While you know where your home or the home you’re interested in buying is located, looking at a zip code map can give you an idea of what’s nearby. If there’s a large city close to the home of if the zip code is within the city limits of a popular city or neighborhood, the home is likely worth more.
References:
Inman News: 5 Factors that Affect Home Values
The Bigger Pockets Blog: Do Schools Really Affect Property Values?
The Wall Street Journal: Mapping Home Value Drops by Zip Code
