Does home location affect home price?

Yes, but...

The old adage, “Location, Location, Location,” is still true.  But keep in mind that location is a very individual thing and a location represents a variety of attributes that give it value.  Some of these include: schools, entertainment, museums, universities, transportation, family and shopping that all play into the definition of location, as it relates to value. 

Traveling West from Downtown Houston you will find the average close-in home is $640,342 and by the time you get to Katy the average price is $285,958.  That would seem to support the idea that, in Houston, distance from downtown correlates directly to value.  But, go just a few blocks East of Downtown and the average price is $130,303.  You will find the same true in Manhattan, Chicago, or Tulsa.  In many places with high value real estate you need only to cross the street, or tracks, to find a significant drop in value.  There are few absolutes in Real Estate. 

The young family with school age children may be focused on a certain school district, while the young professional childless couple may put the proximity to work and entertainment venues ahead of all else.  Being close to family may make a home the perfect location for others.  Location, like beauty, is all in the eye of the beholder.