According to a study by two researchers at the University of Georgia, homebuyers pay an average of 4.2 percent more when the development has the word “country” in the name. And if it has the term “country club” as part of its name, buyers will pay 5.2 percent on top of that.
That’s a total of almost 10 percent more that people are willing to pay for the prestige associated with the term “country club.”
A joke? Hardly. The study, the results of which were published last year in the Journal of Real Estate Research, is a serious investigation of sales in the Baton Rouge, La., area over 15 years. It carefully controlled for such variables as location, number of bedrooms and bathrooms, and days on the market, among others.
“This is the first study to find through empirical research that buyers are willing to pay more for certain property names, with all other attributes of a house being equal,” the paper said. “In fact, buyers of more expensive houses may be willing to pay more for a name that conveys prestige than they are willing to pay for a good school for their children.”
No wonder, then, that the naming process is often a psychodrama, with builders and their marketing teams becoming more hung up over what they will call their communities than they are over the copy for a $10,000, full-page ad in the local newspaper.
There is no tried-and-true naming method. Some builders resort to the old standards — station, park, commons, woods, village, farms, hunt, square and gardens. Some look to history for a name, while others use location or a characteristic of the property. A few pick a name that immortalizes themselves or their loved ones.
It sounds to me like this is all about status. Living in a subdivision with a certain word in its title conveys status and wealth, important considerations for homeowners, particularly when selling a home.
Several thoughts come to mind:
1. I assume that this effect only works at certain income levels. For example, could you build a run-of-the-mill townhouse development, slap the “country club” label on it, and expect a price premium? I would guess not. To some degree, I would guess there is a relationship between the price of the properties (which then limits who can live there in the first place) and the names. Additionally, builders don’t want to dilute their products by suggesting that “normal” homes are upscale in name alone. (It is unclear to me whether the researchers were able to control for all the factors that would separate an upscale suburban subdivision from a typical subdivision.)
2. Beyond “country” or “country club,” do other words or names not matter? If not, then you simply get a muddled mess of subdivision names that don’t really signal much of anything except general references to tranquility, pastoralism, and perhaps some local landmarks or figures.
2a. Are there names that have a negative effect on price?
3. I wonder how much the generally bland subdivision names feed into the critique that suburbia is a homogeneous place. With many subdivision names not anchored to any particular place, you could be in a “Thousand Oaks” in Ohio just as well as Texas. Is this simply another piece that suggests that Americans aren’t anchored to any particular places?