The old adage location, location, location when it comes to real estate is as true today as it ever was. You can do a lot to your home to change its value but the one thing you cannot do is move it. Do you think if you owned a million dollar home amongst $250,000 homes that you will get a million dollars for it. If you do then you would be wrong. But what should you think about when thinking of location and how to get the best return on your investment.
One thing you should look for is not only the best location today but what will be a good location in the future. Since you cannot travel ahead in time there are some things you can look for today that will help you predict the future. Fortunately for us when it comes to real estate we have tons of data to look at the trends through out history.
First let us talk about metro areas. In these areas the closer you are to the city center the greater your appreciation will be year after year. So if you are looking for that future area that will remain good this is the best you can do. The reason for this is when an area is doing well then shops, coffee houses, restaurants all spring up within walking distance of those homes. This adds value to the whole community. The further away from the city center the less the appreciation. This is called the halo effect. When you get to the suburbs those same amenities are still there but instead of walking distance they are all just a short drive away. Then you have to worry about parking and miss all the socialization of a short walk.