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Yeah home prices are mainly based on location and sqare footage. Condition, age, and amenities factor in but pretty much all the houses in a neighborhood sell for similar prices. It's definitely possible to over-improve a house and find yourself upside down in it at least for a while, which is OK if you want to live there and enjoy it but can backfire if you're planning to sell soon.

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Keep in mind this is not true in the Northeast. It’s very common to have multi million dollar homes within spitting distance of dilapidated buildings worth only land value. My parent’s house, while nothing special, sold for a couple hundred thousand when they sold in 2019. A few months before hand our neighbor sold theirs for over 2 million.

Not sure whether the original contention is untrue in the Northeast or just much more rapidly-varying in space.

Where I live (Baltimore) your second sentence is certainly true. There are boundaries across which the vacancy rate is basically discontinuous. In connected regions surrounded by such boundaries I think the original contention pretty much holds, though. There are a couple variables (nbeds, nbaths, sqft, parking space) that pretty much determine the value of the home and going HAM on any improvements they don't capture is probably negative ROI.

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