Sometimes you need to do a little digging to know if a community is worth buying in. Luckily, realtor.com identified seven red flags that should give you pause before you sign on the dotted line.
No. 1: Too many houses are on the market
There’s nothing wrong with two or three listed houses on the same street. But if you see an army of “For Sale” signs, consider looking elsewhere.
“This points to illiquidity in the market and pricing pressure, which is a risk for buyers,” says Alison Bernstein, the founder of Suburban Jungle, which helps families find their ideal suburb.
Of course, the hue of this particular red flag depends on the reason for those “For Sale” signs. Perhaps the neighborhood is rapidly gentrifying and longtime residents have decided to cash in. Maybe there are many older residents who are downsizing. Or maybe there’s a more sinister explanation, like increasing crime rates. Do your homework to assess the situation before making any big moves.
No. 2: The schools are enrolling fewer students
Schools in healthy communities should be steadily increasing their enrollment—or at least keeping the population steady, if there’s no physical room to grow.
“Shrinking class sizes are a red flag,” Bernstein says.
There are a number of reasons enrollment might decrease. Your local school might have a reputation for poor management, sending parents fleeing to charter or private options. Or perhaps residents are staying put as their kids grow up, leading to older neighbors and fewer close-by pals for your kids. That may or may not be a deal breaker, but it’s certainly something to consider.
No. 3: The area leans industrial
A nearby strip of cute boutique stores might be a nice selling point, but reconsider the purchase if the closest commercial influences lean toward the industrial.
“Be mindful of any kind of commercial influence on the block, such as close gas stations or anything that could be undesirable health-wise,” says Ralph DiBugnara, the vice president at Residential Home Funding.
Any nearby industrial plants should automatically nix a neighborhood, and think long and hard before buying across from a car dealership or auto body shop, which attract a lot of car traffic.
No. 4: There are lots of empty storefronts
Don’t just stop at counting boutiques versus gas stations. Are the stores actually thriving, or are there lots of retail spaces for rent?
“Empty storefronts can tell you a lot,” Bernstein says. “They point to less disposable income of residents than clearly there once was.”
Decreased disposable income indicates a neighborhood on the decline. If homeowners don’t have money for dinner out, they probably don’t have cash for upkeep. Shabby homes drag down property values. Meager cash flow can also lead to future foreclosures—and a foreclosed-upon home is a neighbor that no one wants.
No. 5: The Stepford style is in full force
You might love the homogenous, well-groomed suburban look (and there’s nothing wrong with that!). But take a moment to examine it more closely. If all the neighborhood’s homes (and landscaping) look suspiciously similar, “explore how restrictive the homeowners association is,” says Susanna Haynie, a Colorado REALTOR®. “It could be an issue.”
No. 6: There’s no parking
Sure, the property may have a one-car garage—but where will your friends park, and where can you keep your spouse’s car? If the streets have bumper-to-bumper traffic, think twice about buying in the neighborhood—especially if the home lacks a garage or carport.
It’s best to visit at night or on weekends to really tell what will be available to you once you live there. Unless you commute primarily by foot or bike—or you’re OK spending your weekends circling the block—the neighborhood may not be a good fit for you.
No. 7: Surrounding homes aren’t well-maintained
A street in shambles might seem like an obvious red flag. But you also might have heard that buying the best house in the worst neighborhood is a prime opportunity for profit.
Tread lightly here: A street full of run-down homes with overgrown yards and broken fences should set off warning signals. And this has nothing to do with wealth; lower-income neighborhoods can be just as well-kept as more expensive ones. It’s about pride. Neighbors with no pride in their home’s appearance and upkeep decrease property values for everyone.
Plus, problems with the homes next door can indicate bigger issues than meet the eye. Look at every house on the block for issues such as water pooling in the yards, or flickering porch lights.
“If there are problems such as water pipes or electrical issues, you will tend to see more than one home showing damage,” DiBugnara says. Fixing these major problems “could be a major expense, hassle, or detriment to your value later on.”