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When Homebuyers Give Love to Luxury Neighborhoods

Home values in some neighborhoods across the country are more favored by homebuyers than others. The result? Values in these neighborhoods are likely to become six times greater than the overall metro area of their region, according to an analysis by Zillow [1].

For the study, Zillow analyzed neighborhoods in major metro areas that have the most-loved homes based on the number of "favorites" per home saved by homebuyers. Favorite is a feature on Zillow that allows homebuyers to save the homes they are interested in.

Homebuyers preferred luxury neighborhoods, popular vacation or retirement communities, and up-and-coming urban locales that offered potential investment opportunities, the analysis revealed. Homes in the top three neighborhoods on this list were valued at anywhere between $3 million to $1.2 million. These median prices were between 634 percent and 118 percent over the median home value for that metro.

The top three neighborhoods that got the most love from homebuyers included The Oaks, a luxury gated community in Calabasas, in the Los Angeles metro area, Lake Nona Estates in Southeast Orlando, and Kingswood in Atlanta.

Among vacation spots that were liked the most by homebuyers, Ellisville near Cape Cod topped the list. On the West Coast, the honors went to South Beach in Carlsbad, California.

"Inventory is starting to recover, but home shoppers still have to decide between the must-haves and the extras that they are willing to do without," said Aaron Terrazas, Senior Economist at Zillow. "Shoppers may gravitate toward fantasy homes and neighborhoods initially, but most often decide on homes in more affordable communities with good access to transit and jobs, as evidenced by home prices growing fastest in these types of areas."

Homebuyers looking at investment opportunities were more likely to favor homes near a city center with a median home value that was "swiftly increasing but still low relative to the metro." This factor, according to the study, suggested that people expect the country's urbanization to continue with many homing to profit from the increasing values of these urban properties.

One such area was the Manayunk neighborhood in Philadelphia. The working class neighborhood which has gentrified over the past few years has seen home values rising from $73,300 in 2000 to $225,200 in 2018.

Read more about the neighborhoods that homebuyers love here [2].