You need to define for us your idea of less than desirable neighborhood I think before we can answer the question.

I would think that if you plan on staying for 30 years, then get the house that works for you. And quit thinking of your house as an investment: it's a place to live, that's it!

Personally, I've always gone for the house. After all...the neighbourhood improves just with us moving in, right?

For revenue homes the neighbourhood matters more, renters need bus lines, close shopping, etc.

It lacks the 'cache'? I'm sure you mean "cachet" :-).

It's generally more than just cachet -- It's generally also school districts, crime rates, retail support, homeowner maintenance and appreciation potential. Now I don't live in that area anymore, but last time I was familiar with prices there, $600-800K was kind of 'moderate income' for many towns, so the difference between a $600-800K neighborhood and an $2M neighborhood was pretty substantial.

Number one quote from Realtors, " Location, location, location!" If you are looking at the highest (or higher-end) home in the neighborhood and it needs additional $$$$, keep looking looking or negotiate a lower price. Personally, I'd go for neighborhood, all things considered.

Neighborhoods' trends drag their homes' values with them. If you have the most expensive home in the neighborhood, the neighborhood will weigh the home's value down.

Conversely, if you have the least expensive home in the neighborhood, the neighborhood will tend to buoy your home's value.

Financially speaking, you should never overbuild for the neighborhood, nor should you overbuy.

Go for the house in the better neighborhood. In addition to above comments, if plans change, it will be easier to sell, too.

A less desirable neighborhood is not possible to correct (at least by a single owner).

Defects in a house are under your control.

You mention you're in the SF Bay area. If you're looking on the Peninsula, I can tell you that school district is critical, even if you don't have kids. A house in a bad school district is going to be more difficult to sell in the future than one in a good district. School districts don't follow town borders, so even towns with less cachet might have a sliver of their town within the boundary of a more desirable school district. You'd need to look on the school district websites to confirm that the house is within its boundaries - some websites have a way to enter a street address and find out if it's in or out of the district.

I always go for location, I care about my neighborhood, for that I can fix my house to my liking.

Location! Location! Resell is so important nowdays. You never know what may happen. My husband died recently and luckily our home is in an excellent area.

This is a tough one. While I agree that location means a lot, if the schools, etc are similar; you have to do what's right for you.

Say you do find a house (you can afford) in the right location, what if it isn't perfect (size wise) or that you have to put work into it? To me, it sounds like you might want to rethink and possibly add a 3rd location if possible.

When we were buying; the houses were crap. Either they were big enough but the layout sucked, the kitchen remodel had a bad layout; bedrooms were small, needed lots of work.. these were all about $100k more then what we were selling for. My old house was perfect; just needed the kitchen updated & 1 bathroom sheet rocked.

What we ended up doing was moving farther south where there were better houses for the price we were looking in.

I don't like owning the most expensive house; and if you did something like that, you can't expect to make money on the house. It is not an investment but a place to live. It's possible others will move there & update the houses making yours even with theirs; that's what happened in my last town. A lot of new blood moved in and did a lot of upgrades. You can't see into the future so you have no clue what your town will be like in 5 to 30 years

Buy the house that suits you in a location you can afford with good schools.

People go to public schools from nice neighborhoods in NoCa? Surprises me but what do I know. I personally went with a lower priced neighborhood and built on the high end for it. The higher priced neighborhoods just seemed so pretentious (aka cachet). Probably not the smartest decision for resell but who knows. At a certain level, cachet is in the eye of the beholder - sometimes people don't want the fanciest neighborhood.

FWIW - I am talking lower end as $600-$800 and higher end as $700-$1.2 in NC - which might be like $1.5 and $2.0 around you. At this level, schools matter less and they are forever changing around here. Most go private in our neighborhood despite the excellent rep of the public schools. Something about "no child left behind" = "no child put ahead"....

People go to public schools from nice neighborhoods in NoCa?

Yes, believe it or not some of the best schools in NorCal are public schools in affluent cities. I can only speak to the Peninsula where I live, but only 2 of my son's classmates transferred to private schools their freshman year of high school; the rest went on to the publics. The schools in Palo Alto, for example, are top-notch. Take two houses in the city of Mountain View (home of Google) which is served by 2 school districts. A typical MV house, say 3 bedroom 2 baths on 1/5 acre, would be $50-$100K more if the house was in the neighboring Los Altos elementary school district vs in the Mountain View elementary district. To their credit, Google is working with the public schools in MV, but the 2 districts are very different, with Los Altos having one of the top APIs in the state. Median sales price in Mountain View: $663K. Median sales price in Los Altos: $1,410K (these are March-May 2010 numbers from Trulia).

So back to the original poster, if he/she has no children, will never have children, and will be living in the house for the next 30 years, then maybe a good strategy would be to find the nicest house in the worst school district.

Here is a link that might be useful: California School API report

Speaking as someone who has already crossed that bridge and have determined it was the absolutely wrong decision - we chose house over location. Big mistake! Live and learn I guess.

Don't get me wrong. Our schools are in great shape and neighborhood is average middle class for where we are.

That being said - it's soooo not where we should have settled when we moved 1.5 years ago.

Now, I eagerly watch the time tick away for the time to put the place up for sale.

It'll be at least another 4-5 years unless something pushes us over the edge and it must happen sooner.

Location. You might think an area will come up - or even stay the same, but what if it doesn't. We have done both and I've learned that the "where" is much more important than the "what". Hard to pass up a great house though, so I understand your dilemma.

Now you know the reason why the house is great with the right price. I'm sure you can't the same house for the price in the "right" location.

In 30 years a neighborhood can go really bad or get better. Hard to read tea leaves but in this case you need to try. You don't want to be living with bars on your windows.

I'd pick the best neighborhood. You can aways fix up the house. You have no control on the neighborhood.

Keep looking in the best neighborhood you can afford.

Regardng public schools, oddly enough there are a slew of private schools along the North Shore of Chicago -- where the public schools top the charts ntaionally. Go figure!

Location Location Location

However, you still have to live in the house. In my area I think of areas as - bad, not good, ok, good, better, best, really really expensive.

I stayed in the good or better areas which are still in the upper middle class. Best is the expensive upper middle class area, and really expensive is well really expensive.

For me, although you could buy in the "best" areas, you would be buying a hovel in my price range. the "better" buys a decent house, the ok-good buys about the same house but cheaper.

Point is, buy a decent house in the best area you can afford. Location is huge, and you won't really regret buying a more modest house in a nicer area, but don't buy a knock down that you will have to live in unrenovated

Location. You might have to sell in a few years and be stuck with a boat anchor.