Neighborhood domain name pricing

[melmunch]

I would like to know what you think of a pricing scale for Neighborhood domain names.
At the expensive end of the spectrum, you have buckhead.com which sold for 250k and there are a few other prominent examples.

As domain name wire writes,

I’m writing today from the Atlanta suburb of Buckhead. Buckhead is the world’s most expensive neighborhood. Well, in domain name terms, that is. The domain name Buckhead.com sold for $250,000 this year. $250,000 seems like what someone would pay for a city name, not a neighborhood.

But geographic domain names continue to ride the rising tide of localization. How many times you have you heard about local search over the past year?

At first this seems counterintuitive. The internet is global. Why would someone want a domain that applies to only a small percentage of the world, not a generic word that people in every city might search for?

I recently purchased the domain of a small Austin suburb for $5,200. A traditional pay-per-click domain buyer would laugh at the price and say it’s too high. After all, the domain only gets about 10 hits per day. But this small suburb of 10,000 people is growing quickly. It should nearly double in population over the next five years. And it’s affluent. There are at least a dozen home builders in the suburb selling their share of nearly a thousand lots. If you were one of those developers, wouldn’t you pay $5,000 for just one lead that resulted in a sale?

The price of a city name is probably out of your reach. There’s no way I could buy Austin.com. But you can still join the rising tide of geo domains by buying neighborhoods, suburbs, and small cities.

I am looking into a few of these neighborhood domains and I am curious what factors and stats that are readily available would go into pricing. So far, I have:

1. Population
2. Average income
3. Growth
4. Proximity to tourist destinations
5. Name recognition
5. # of restaurants, hotels and other advertisers


Would anyone care to add in others? I am also looking for historical pricing on these domains.

 

[gmac17]

neighborhoods are really tough. Buckhead is one of a few places where the neighborhood has that much name recognition. I might type in buckhead.com to get a hotel near buckhead, but i wouldn't type in soho.com to get a hotel south of houston in nyc. Even with that, i think most would say the seller made out very well in that one.

 

[petrosc]

no matter how recognized a neighborhood is, the xxx,xxx price tag is nonsense, the only thing that made Mr. Latona buy it for so much is IMO personal reasons(i believe he lives there) and not so much as an investment

I also know(i get this impression from personal experience) that mr latona does not usually pay end user prices when he wants to invest in a domain... I'm using that to further support my previous statement

 

[melmunch]

I'll grant you that 250k is a lot of money for a neighborhood, but he has developed it into a very nice site, and the point is, it isn't just targeting the type in traffic. He is targeting search and branding traffic as well. I think that the type in traffic from geo domains is negligible when compared to the search traffic that they bring in once developed.

www.buckhead.com looks like it was done very well and if I lived there, I might go to it once a month in search of some service referral instead of trying my luck with google. If he added a local directory then that would only increase. Also, if you look at the overture numbers, there is very nice search volume on this neighborhood. My guess is that he makes back his 250k in less than 2 years.

2690 buckhead
1510 buckhead real estate
1454 buckhead ga real estate
1209 buckhead georgia
912 buckhead atlanta
901 ritz carlton buckhead
790 buckhead restaurant
589 buckhead diner
572 buckhead backlot
564 buckhead life group
519 buckhead life restaurant
501 buckhead hotel
449 buckhead life
440 buckhead church
407 buckhead life restaurant group
384 buckhead saloon
384 westin buckhead
351 buckhead atlanta hotel
315 sheraton buckhead
310 buckhead uniform
302 westin buckhead atlanta
297 intercontinental buckhead
271 grand hyatt buckhead
252 mercedes benz of buckhead
238 atlanta buckhead restaurant
237 buckhead show
226 buckhead beef
218 apartment buckhead ga rental
206 aiu buckhead
206 embassy suite buckhead
204 grand hyatt atlanta buckhead

These are just some examples.

If you have an area name that is not well known even in the particular area, then you are right, aside from no type ins, there wont be much search traffic either. However, a recognizable area seems like a very smart bet.
If I am looking for a lawyer in Buckhead, I am 5 times more likely to search for buckhead lawyer as for Atlanta Lawyer, and 10 times more likely than for Georgia lawyer. The cost per click for laser targeted neighborhood service traffic reflects this with a heavy premium.

 

[gmac17]

it was way overpriced imo, but it doesn't mean it won't pay off for him. Look at that the associated cities guys have done. I forget the numbers, but the guys who own palmsprings.com charge over $1,000 per month for the feature tiles on the main page of their site.

 

[dnalias]

melmuch: in addition to your points consider these.
real estate value might be another good indicator?
also is it more commercial or residential?
are there more multi-family or single family homes?

i think neighborhood domains are great for real estate agents.
agents can make a little portal for the neighborhood, in return build massive brand recognition for their real estate business.