Want to know if a neighborhood will blow up or dry up? Don’t overlook these big-picture factors:

How do you predict the value of a neighborhood? While no one can say for sure how home values in a neighborhood will rise or decline over time, there are big-picture economic factors that you can look for to help get handle on where they may be going.

1. Major regional employers. If a community depends upon one or two large companies for a high percentage of local employment, you can bet that as the company fares, so will the neighborhoods. We have in our community the PFizer and Smith Kline Pharmacutical companies in Collegeville that have a major impact on our local neighborhoods.  While “company towns” are hardly the norm these days, don’t overlook the possibility.

2. Number of properties currently for sale. Sometimes there’s nothing wrong with a neighborhood just because the inventory (i.e. number of homes on the market) is high. The inventory for Montgomery County is 4,377 units however, the average percentage of Settled Price/Original price has gone from 89.6% in 2012 to 92.2% in 2013.  Other times, something may be amiss. If you’re seeing street-after-street of “FOR SALE” signs, ask questions.

3. Major construction. Is that a new school they’re building, or is it a supermax prison? Did they clear that land for a new shopping center, or is it a new loop for the interstate? Certain types of construction can improve home values while others can hurt. Getting in touch with the local planning commission as well as the local newspaper’s business section (or website) can help illuminate what’s behind those bulldozers and cement mixers.  We should all be pleased about the contruction taking place on Route 422 near Pottstown and the new shopping strip mall in Oaks, PA.

4. Rental density. People who own the homes they live in tend to take better care of them. Also, it’s preferable to have long-term neighbors versus high-turnover tenants. Absentee landlords or seasonally rented properties can also be a drag on a neighborhood. Get a feel for the rental density and the direction it’s heading. Rental density matters.

5. Environmental conditions. One industrial accident that poisons a water supply is enough to annihilate home values. How susceptible is the region to extreme weather? Don’t rule out environmental liabilities or benefits.

Nobody’s crystal ball is perfect, but to ignore major macroeconomic factors is dangerous. Even if you’re only planning on staying in a location for 5 - 7 years, do yourself a favor and try to position yourself to make, not lose money, on your home with these tips in mind.

Have questions about a neighborhood in Montgomery County?  We are happy to help. Get in touch today:  610 948-6970 or visit or website at www.montgomeryvillereaestate.com