‘Country’ in Subdvision Name Nets Higher Values

Home buyers are willing to pay 4.2 percent more for
a property with the word “country” in the name, and an additional 5.1 percent
for the phrase “country club,” according to researchers from the University of
Georgia.

In the study, researchers
evaluated the effect of property names on home values by analyzing MLS data from
Baton Rouge, La., between 1984 to 2005.

Researchers found that buyers do assign a price premium to properties
that include the word “country” or “country club” in subdivision names.

Wealthier buyers tend to be more apt to
pay for the name, in which they associate with affluence. In fact, researchers
say that wealthy buyers are even more willing to pay a premium for a property
name that conveys prestige than they are for a good school for their children.

However, during recessionary times,
researchers found that the words have less effect on overall buying behavior and
that buyers are less willing to pay a premium for the prestige associated with
these words.

“The implications of this
are
important in
real property marketing strategies and the understanding of naming
strategies,” note the
researchers Velma Zahirovic-Herbertand and Swarn Chatterjee in the study.
“This
implies that
a more deliberate and empirically-based study of property names
could enable significant
improvements in return on investment for investors and long-term home owners. In
addition, some assumptions about the primary drivers
of home values may be challenged;
buyers’ perceptions of real property attributes


may prove as valuable as or more valuable
than the real utility of some attributes.”

This is the first such study to find that
buyers are willing to pay more for certain property names, when other attributes
of a house are equal, the research notes.

Source: “Home Values: What’s in a Neighborhood
Name?”
AOL Real Estate (May 17,
2011)

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