Location is everything in real estate, but for many homebuyers, a safe location is really what matters most. And when it comes to purchasing a property in what they perceive to be a safe neighborhood, it turns out they're willing to make some rather hefty compromises.
Vivint (NYSE: VVNT), a smart home company, surveyed nearly 1,000 homeowners to get their insight on what a "safe neighborhood" means for them. The survey found 53.6% of respondents said seeing children playing outside was a top indicator, while 53.2% said seeing walkers and runners were another. For about 46.4%, the mere presence of neighbors being out and about is reassuring.
Other top features that buyers deemed as safe included a neighborhood watch (34.8%), limited police presence (30.6%), and a regular schedule of community events (29.4%).
The report also looked at generational trends among the respondents. Baby boomers and Gen Xers both listed children playing, people walking/running, or the presence of neighbors as their top three safe neighborhood features, though not necessarily in that order. Millennials also agreed on children playing and walkers/runners, but they also thought having nearby schools was another must-have for a safe neighborhood.
The trade-offs for living in a safe neighborhood
The Vivint report also took a look at what compromises homebuyers were willing to make in order to live in what they considered to be a safe neighborhood.
Of all respondents, 40.2% said that they were willing to have a longer commute, while 39.2% said they would deal with having more of a police presence, and 34% were willing to purchase a low-value home if it meant they could live in a more affluent neighborhood.
About one in four (26.6%) were willing to put a strain on their budget to live in a better neighborhood, while only 16.6% were willing to live in a subpar school district to feel safe.
Baby boomers and Gen X saw eye to eye in their willingness to to take on a longer commute, live in a smaller home, and be in a community with more police presence. The top three tradeoffs for millennial respondents were a bigger police presence, longer commute, and a lower-value home.
How much is safety worth to buyers?
The report also asked respondents to consider a comparison of two homes that were identical in size but had different neighborhood features. Respondents were willing to pay 14% more for the home in the neighborhood that was perceived to be safer based on the following features: low commercial vacancies, moderate foot traffic, children playing outdoors, no run-down homes, and well-maintained roads and sidewalks.
While investors might be willing to take a risk on transitional neighborhoods, this data shows that homebuyers will search for properties in more established neighborhoods if it means increased safety.
In general, 22.5% of respondents would be willing to pay $50,000 to $99,000 more to live in a safe neighborhood, while 18.9% were willing to pay $100,000 or more. The older the respondents, the more they were willing to pay. In fact, baby boomers were willing to pay 26.6% more for living in a safe neighborhood, which could be a reflection of the growing trend of aging in place. It's also worth noting that respondents with children are willing to pay 20.5% more for a safer neighborhood.
The bottom line
We often talk about the allure of a move-in-ready home for buyers, but this report shows that there's even more value to be had in a move-in-ready neighborhood. While up-and-coming neighborhoods could provide bigger returns for investors down the road, homebuyers seek safety in more established neighborhoods now.