Excluding the obvious underlying economic conditions which infuence housing demand (interest rates, employment growth, personal income growth, etc.) -- the following 5 factors drive demand for specific neighborhoods:
1. Schools. Even though less than 40% of American households have school-age children, most single family housing demand is created by families. Schools which possess good conditions and high test scores are going to make their surrounding neighborhoods more appealing to buyers.
2. City Appeal and Amenities. Certain cities command a level of prestige through a combination of lifestyle amenities, safety, and association with high-income demographics. These cities have typically seen greater long term appreciation. In addition, certain cities enjoy a fabulous array of culture, recreation, and dining options which create buyer demand.
3. Traffic. When comparing home values, keep in mind that homes on quiet streets or cul-de-sacs will appeal much more to most buyers than homes with more vehicle traffic. In addition, appearance of traffic noise can also reduce a home's value.
4. Sun Exposure. Dark homes never sell as well as light ones. Look for homes that contain lots of windows and natural light. Back yards with afternoon sun exposure are also very popular.
5. Floor Plan. Some appraisers would consider floor plan in valuation, up to 25% difference in value! Buyers today favor homes with open kitchens, master bedroom suites, and large great rooms. Since many homes in the coastal areas were built prior to 1980, you may find yourself looking at homes with poor layouts. In general, remember that a typical kitchen remodel can cost up to $20,000 for new appliances, granite counters, custom cabinetry, and wood or stone flooring.
6. Major System or Structural Issue. Electrical, plumming, roof and foundation are what we are talking about (and AC system if has central AC). Unless it's super bargain for handymen or investors, buyers want a place to move right in without major investment. Additionally banks would require major issues to be repaired before they would underwrite a loan -- it's their assets they want to protect.
7. Outdated Inerior. Which can affect at least 10% of home value -- especially in a buyer's market. For buyers, you must account for the improvements not only based on their cost, but the hassle of managing the contractors and the inconvenience of dust and privacy intrusion. But the good news is -- somethings are easily fixable with a small budget when you are getting a house with great bone in a great location.