If you've been reading for a while, you may recall that we have moved around the country a bit and are currently living in our third house. Each time we've moved, we've learned a little bit more about the home buying process. Some of the latest lessons learned in real estate are not things that I was expecting to learn.
When we bought our last house, we really were focused on the house itself and the cost. We thought the location was 'good enough', but we really didn't know the area. During the time we lived there we had our house broken into, learned that the public schools were unaccredited, and even heard gunshots from a nearby area that we didn't realize we lived so close to. Location, location, location. Got it.
As we searched for our current house, we focused on having the things our previous neighborhood lacked. We now live in a great neighborhood that was built about 20 years ago. Although the houses are starting to get a little bit older, the architecture is very traditional and the homes and yards are all very well maintained. Curb appeal. Got it.
We were attracted to this neighborhood because of the large lot sizes, the awesome school district, low crime, and overall privacy. Each time we've moved, we have learned a little bit more about what is important to us in a house and neighborhood. In our current house I've realized that there are actually some really great benefits of living in a nice area that you may not be thinking of.
An Established Neighborhood Is Better Than A New Neighborhood
Our last house we built brand new in a new subdivision. The house we live in now is 20 years old. When all the houses in a neighborhood are new, it's expected that the everything will look great. But until they are all maybe 5-10 years old, you really don't know how well people are going to maintain them. This can impact your property value and have an impact on how quickly you can sell when that time comes.
One other interesting observation is that where we live, your typical first-time home buyers are priced out of our area. I have a theory that neighborhoods are better maintained by people who have previously owned homes. First time home buyers might bite off more than they can chew financially, which can limit the ability to perform maintenance. They might also underestimate the time commitment needed and grow complacent with neglecting proper maintenance.
That's not to say that no one in our neighborhood is living beyond their means, but people are established enough so that they know what is needed to maintain their homes physically and financially. One piece of evidence I can point at to support this theory is that the foreclosure and short sale rates seem to be inversely correlated to home price in our area.
An HOA Can Add Value
Contrary to popular belief, HOAs can actually add value. But that isn't always the case. Our last neighborhood had an HOA where we paid around $350/year and I really don't get anything for it. We had an embarassingly large percentage of homeowners who never paid their dues, and the HOA didn't have the power (or money) to enforce collections. If people didn't mow their lawn or adhere to other covenants, the HOA really had no enforcing ability. It was useless and a waste of money.
Contrast that with our current neighborhood and it is night and day different. Here we pay $700/yr, but have access to incredible neighborhood amenities (pool, tennis, etc.). Our HOA sponsors tons of social events and has newsletters and communication that really help build a great community. 95% of homeowners pay their dues on time and the HOA finances are managed very well. The HOA has almost $200k in cash reserves for major repairs so the odds of a surprise assessment are virtually zero.
In The Millionaire Mind, Thomas Stanley surveyed households with net worths exceeding $10M to observe differences and similarities to households with net worth between $1M and $5M. One thing that stood out to me was that people in that demographic tended to buy homes in established areas with great schools so they didn't have to pay for private schools.
I think I always knew that schools mattered, but now that I have a child in school I have been very impressed with the experience we are having. This is especially true when compared to stories I hear from friends with kids in the neighboring counties schools.
One thing I really didn't expect when I moved into a nicer area was the career benefits. When I go to the neighborhood pool, church, or the grocery store, I often run into people I recognize from work. I've had that happen before, but being in a nice neighborhood surrounded by even nicer neighborhoods, pretty much all the people from work who live near me are higher in the org chart than me (our CFO even used to live not far from us).
Because of my proximity to company leadership, I have had a lot more personal interactions with people who can be intimidating at the workplace because they might have several thousand people under them. I've done things like campouts, Sunday dinner, and carpool with people I consider friends, who just happen to be officers of a Fortune 100 company. Even those who don't work at the same company are often in very senior positions in their companies.
I don't ever want to abuse my relationships to advance my career but have found these friendships provide a lot of opportunities for me to be mentored, especially on navigating my career.
We get offered so much free stuff from our neighbors, we have to say no. We're talking about really nice stuff too. One friend gave us $1,000 worth of Thomas the Train toys his son had outgrown. He also gave us a 55" TV that he didn't want anymore (which ended our 6 year stretch of having no TV). The same friend offered us almost new furniture that wasn't big enough when they moved to a new (very large) house.
We've received clothes, toys, playsets, you name it. Not only do our neighbors tend to buy nice stuff, but they also don't have very many children. This means that things don't get too beat up before we have our four kids do their handiwork.
In our area, we have donation centers for Goodwill/Salvation Army, etc, but none of the corresponding Goodwill/Salvation Army stores to actually buy things. I've found many people would rather give things to people they know than a faceless organization for a tax writeoff they'll probably forget to take.
Every time we move, I'm sure I'll learn more about what is important to me in a house. Recently I've learned that living in a nice neighborhood has benefits I hadn't considered. An established neighborhood has had time to mature and you can know what to expect. HOA's can add value when done right. Paying extra to live in a good school district may actually save you money over time. People buy and give away a lot of stuff. Being on the receiving end in a nice area you can get a lot of great stuff for free. The most unexpected thing I've learned is that living in a nicer area can create opportunities for informal mentoring.