Creating a Better Standard of Living For Your Family

"The kids miss you."  Those weren't the words he expected to hear that night but it didn't come as a complete shock.  After all, he was gearing up for his commute tomorrow and it was going to be the same as it always was on Monday mornings.

"Besides, what if there's an emergency?" she said.  He passed the commute time listening talk radio and audio books, and he'd learned enough French to get him through his last business trip without accidentally ordering snails at local restaurants.  (See the article How Long Will My Silicon Valley Commute Take?)  But he knew that when the tide flowed anytime after 3pm, there was no such thing as a person in a hurry: there were just kindred spirits parked on the highway.

They could afford it now and the extra time would help better their standard of living.  She knew he had work-a-holic tendencies and had a freelance job herself.  So it just made sense to move --- but not only because of the extra time.  While this part of Silicon Valley was closer to other opportunities for both of them, she also said off-hand that she liked that it was a more prestigious neighborhood with stronger schools and less cars parked along the street.

We talked earlier about the logistics of moving up to another home.  (See the article Keeping Your Sanity While Moving Up to a Larger Home.)  Because it's such an important decision both financially and emotionally, it's important to understand what you're getting when you upgrade.  (Also see the article Emotions in Real Estate: From Fear to Elation.)  Here are some of the factors to look for.

What a Zip Code Buys You

From their family room, we looked across the street.  "That's really not a good thing for when we go to sell your home," I said.  He looked at me a little quizzically but he and his girlfriend looked at each other for a second and got the drift. 

This was a quiet neighborhood of single-family homes.  There are some neighborhoods in Silicon Valley where I joke that you can staple hundred dollar bills to your jacket and still walk down the street feeling safe.  And now that his options had vested and the two of them were engaged, they wanted to move to one of those zip codes.

"Yeah, the owners across the street rented out their home.  Now the new guy has a lot of guests over and it's never the same cars twice," he'd said.  Experienced property managers have seen this before, but that's a story for another day.  Ironically, this was actually a statistically safe neighborhood. 

Peace of Mind

Detail-oriented real estate agents not only do research to understand the numbers, they also have an earned understanding of "how safe" a neighborhood is.  After all, agents who list properties in a neighborhood spend a lot of time there.  Families, especially those with young children, or parents who travel a lot, are acutely aware that how safe they feel affects how well they live.

Whether the home is seven- or six-figures, on behalf of clients, I'll often call the local police department to see what law enforcement thinks of an area and if there's anything my buyers should know about.  Usually, it's pretty straight-forward because most of the areas that have a reputation for being safe are actually safe.  

One time, though, I heard some rumors.  Then the beat cop told me that she wasn't allowed to give out any opinions because some real estate agents had gotten angry and reported what she said to her supervisor.  At that point, I wondered aloud why anyone would try to buy a home without their own representation: I was representing the buyer at the time and that was information I wanted for my clients.

After some convincing, we dug into the details.  Three blocks over in a commercial zone, there was a cluster of local banks, each of which had been robbed in the last few months.  Because the highway was in the opposite direction of the homes in question, each time the robbers fled the neighborhood away from any residences.

I'm obviously not saying that I would have recommended this home to my clients based on this information.  But when I did my duty and presented it to them, it was a non-factor in their decision because it didn't affect the residential area.  If this information were hidden, they would have assumed the worst and never would have sacrificed their standard of living and peace of mind on the neighborhood.

Pride of Ownership

People who've invested time, effort and money into owning and living in a home will tend to take care of that investment and want the people around them to do the same.  People who haven't may not have that same mentality, and while safety is more important to standard of living than pride of ownership, your family's comfort with the neighbors has a day-to-day impact on how well you live.

Financially, if there are two identical homes and one is closer to rental properties and the other is surrounded by other single-family homes, in general, the latter will be more valuable and the mentality of the neighbors will be slanted more towards maintaining property values.  If you pay the same for the former, you should consider that an implicit increase in cost.  (See the article Not Overpaying When Buying a Home.)  The most prestigious neighborhoods generally have high owner-occupancy.

Prestige

Many buyers are a little sheepish when they talk about prestige for fear that they think others will judge them.  (See the article Determining Your Must-Haves When Buying a Home.)  But it's important to understand that the branding of a high-end neighborhood often helps their homes' market values weather tough times in a way no other factor can.  Just look at the difference between Milpitas and Palo Alto in 2007. 

In fact, there are tangible reasons why these areas feel "nicer" than others, and some of those reasons are government or neighborhood regulated.  For example, neighborhoods with HOAs, often restrict the number of people who can live in one home, how or whether cars can be parked curbside, and where to put garbage, among other things.  While there is a trade-off in flexibility under these rules, the difference between these neighborhoods and ones nearby without some common agreement is often obvious.

And almost all cities have zoning laws that regulate minimum lot sizes and setbacks so that homes have ample spacing between them.  It's no coincidence that more prestigious and expensive cities have stricter requirements, and hence, larger lots. 

This in turn keeps property values up, increasing the tax base and allowing for more services.  Palo Alto, for example, provides its own electricity.  But more often these services often show up as more ample trees and parks, safer streets, better fire protection, and higher-quality schools.

Schools

Speaking of quality schools, here's a thought experiment.  Whose elementary schools are better than the ones in Cupertino or Palo Alto?  Or Los Altos or Saratoga?  The article is a little dated but the relative numbers are about the same.  The most expensive and prestigious cities unsurprisingly have the highest test scores.  (See the article Silicon Valley School System Bang-for-the-Buck.)

The article mentions that there are better values and individual schools scattered around various cities in the Bay Area, but people know which cities are associated with good schools because of the branding prestige provides. 

Schools, unsurprisingly, are so important that many people move specifically to an area for them.  My clients with more than one child often do the math and decide that moving to an area with a better school district is much less expensive than sending their children to private schools. 

Some of my clients would rather choose a good district as a whole instead of move to one school's neighborhood because it shows a regional commitment to education.  Others would actually like to move up, but have less competitive schools because they measure standard of living by how happy or well-adjusted their children are.  And others want to find a window where they live in a less prestigious city that feeds into a great school district.

It's not only important for real estate agents in Silicon Valley to understand what goes on in the minds of sellers (see the article How Buyers Can Walk in the Shoes of Sellers and Their Listing Agents), it's important to do so to best represent buyers as well.