The No. 1 Factor Driving Home Values
Square footage, curb appeal and bedroom count only tell part of the story when it comes to the value of a single-family home. Arguably, the biggest factor is where the home sits.
Across the United States, geography and neighborhood quality dramatically influence what buyers are willing to pay — and the differences are bigger than many expect.
Location Still Reigns Supreme
NAHB analysis of data from the American Housing Survey reveals that homes in large metropolitan areas command the biggest premiums — about 60% more than similar homes in non-metro regions. Even smaller or mid-sized metro areas offer a healthy boost, with home values coming in 22% higher on average.
Using New England home values as a baseline, a wide range of values can be noted across the country:
- Pacific states — including California, Washington, Oregon, Alaska and Hawaii — top the list with values about 35% higher than those in New England.
Meanwhile, other regions lag far behind in home values compared to New England:
- East South Central and West South Central homes are more than 60% lower.
- East North Central and West North Central homes sit roughly 47% and 46% lower, respectively.
- South Atlantic homes are 39% lower.
- Middle Atlantic homes trail by about 30%.
- Mountain region homes come in about 19% lower.
Neighborhood Quality
Beyond city boundaries and state lines, the character and condition of the neighborhood itself play a powerful role. Buyers aren’t just purchasing a home; they’re buying the experience of living there.
A neighborhood’s overall quality — measured on a 1–10 scale — adds about 2% to home value for every point on that scale. Moving from a neighborhood rated a “5” to one with a rating of “7” would mean values would increase by 4% for a home with identical characteristics.
For more insights, including details on the substantial impact of negative conditions within a neighborhood, read this Eye On Housing article from NAHB Principal Economist Na Zhao.