In a number of articles last week, we looked at the opportunities to invest in real estate and discussed some of the advantages and disadvantages of different types of properties. In order to further explore the potential real estate investment earning, we need to go back to the most important principle: location, location, location. Certain locations promise better opportunities for growth, while obviously, some are not as promising. A new tool, provided by Attom Data, allows investors to easily, visually see which neighborhoods or investments would be the best real estate investment.
Attom Data created the tool based on data from more than 11,000 neighborhoods across the United States to determine which neighborhoods provided the best investment. The map depicts each community on a scale from A to F, with the letter grade A being the highest. The grades were assigned based on eight key variables: median price, annual home appreciation, average school score, average crime rate, unemployment rate, average fair market rent for a 3-bedroom in the neighborhood, annual rent appreciation, and gross annual rental yields. For each of the eight variables, an average was assigned for each grade. For instance, the average median home price for a grade A house is $513,968, while for a grade F is $299,934. Similarly, the unemployment rate for grade A is at 2.5% with the unemployment rate for grade F being 4.6%.
Attom Data’s Vice President, Daren Blomquist, believes the real beauty in the visual depiction of real estate investments is that it allows for communities across the nation, all possessing differing characteristics, to be observed and analyzed on a similar scale. In his words, “there is a lot of diversity. There are good neighborhoods in a lot of different parts of the country, and they’re not all going to look exactly like each other.”
Taking a look at any metropolitan area in the United States using the data visualization shows that various grades are achieved across different metropolitan areas. Some metropolitan areas are also better than others; for instance, some parts of larger metropolitan areas have a larger focus on grade A neighborhoods, while others are more predominantly dominated by lower grade neighborhoods. Looking across the data as a whole, it appears that the top-rated neighborhood in the United States is the Westlake neighborhood in Mobile, Alabama. In a close second is the Union Section of San Jose, California. In total, San Jose is known for its grade A properties, boasting a median house price of more than $1 million.