Location Matters: How Rental Property Location Impacts Price

October 7, 2023 Off By Noah

A rental’s location can significantly influence its price. In fact, it can even determine the market of tenants a property will attract.

For example, a city’s most posh neighborhood often carries a premium. These apartments are typically located close to fun restaurants and stores. In addition, they tend to offer onsite amenities that benefit the entire community.

Impact of Location on Rent 

A property’s location within a city or suburb can affect the price of rent. Some locations are more desirable than others and can boost a rental’s income potential.

A major business or industry emerging or leaving a region can also add to or subtract from the value of a rental home. A city with a strong economy will typically have higher rent prices than one with weak economic activity.

Neighborhood characteristics are not as easy to measure as structural characteristics, but they can have an impact on rental home prices. For example, neighborhoods that have a history of natural disasters may have higher insurance premiums than those with little to no such history.

Additionally, neighborhood safety is a key consideration for most renters. A city or region’s history of crime and violence can affect rental prices.

Urban vs. Suburban Rental Prices 

A renter’s decision to live in the city or the suburbs can be based on many factors. However, the most significant factor is usually cost. Urban areas typically have higher rental prices, since space is a premium in densely populated cities and more people are interested in renting there.

Suburban rentals tend to be more affordable, and they have a lot to offer budget-conscious renters. For example, families who can’t afford to purchase a home often choose to rent a single-family house in the suburbs where they will have plenty of space and privacy for their children.

During the pandemic, suburban rents increased faster than those in core cities. But, as rent declines have become more pronounced in core cities, the gap between urban and suburban rents has narrowed and check it out for your reference https://vnrenthome.com/p40/city-garden-apartment-in-binh-thanh-district-hcmc.html.

Neighborhood Desirability in Rentals 

The neighborhood in which a rental property is located can have a huge impact on the rent amount you can charge. Some macro factors include the prevailing economic conditions and the local population.

A good school district is another factor that can influence a rental’s desirability. Even if the tenant doesn’t have children, being in a good school district may increase the property value when it comes time to sell.

It’s a common belief that rentals hurt neighboring home values, but Rohe notes there isn’t enough research on this to know for sure. However, he says that homeowners sometimes have valid reasons to be concerned about an abundance of rental properties in a neighborhood. This can include a stigma that renters don’t contribute to a neighborhood and that they bring down nearby home values.

City Size and Rental Costs 

One of the biggest factors in determining the cost of renting an apartment is location. As the old saying goes, “location, location, location.” The closer to services like public transportation, grocery stores, and restaurants a rental is, the more expensive it’s likely to be.

The rental market also varies from city to city and even neighborhoods within cities, so a property owner needs to do their research and understand what’s driving prices before listing their property. This can include local economic conditions, municipal rates, and seasonality. In a city with high consumer price indexes, for example, it may be more beneficial to own a home than rent. In other locations, however, the opposite is true.

Transportation Proximity and Rent 

In a city, proximity to public transit can have a significant impact on property values—and, by extension, rent numbers. But that’s only true if it’s the right kind of transit. For instance, it’s one thing to ask premium rent for a home that sits near a Boston MBTA station, but quite another to charge the same amount for an apartment that overlooks a noisy freeway on-ramp.

To analyze the effects of location on rental prices, this study uses geostatistical methods to estimate hedonic models for the standard dwelling. These are then used to produce an isovalue map that displays minor and major effects by zone. The results show that ground transportation proximity is an important factor for determining rental prices, and that these effects are greater in cities with subway transit networks than those without them.