In additon to the previous post, I would add that Willy would always complaint throughout the play about the changes going on in the community, about how many things are being built, and how it makes him feel like he is in some form of prison. It does feel like you are in a prison when you cannot escape the demons in your head. Think about addiction, depression, PTSD, bipolar disorder, guilt, and eating disorders. When you see anything around you that remotely reminds you of your inner weaknesses, you feel that they are surrounding you.
In Willy's case, his weakness is the inability to let go of the past, unfinished businesses, guilt, and frustration. Each time something builds around him, he is connecting that to himself. He has not been able to move on, just like he has not been able to move away, make better for his family, nor achieve forgiveness. Hence, the location is directly connected to his mentality: Not moving forward nor accepting that the world is moving forward.
Willy's house is an anachronism, a small-one family home over which loom menacing apartment buildings. The house is Willy: small, old, worked on, ready to be replaced. It was once in a garden-like yard replete with shade trees. Now the trees are gone, the air is thick, and nary a star can be see in the night sky. Like Willy, the house is vestigial, a reminder of how things used to be, a vague memory of better, less stressed-out times. Here is the description of the house provided to us by Miiller at the beginning of Act I:
Before us is the Salesman’s house. We are aware of towering, angular shapes behind it, surrounding it on all sides. Only the blue light of the sky falls upon the house and forestage; the surrounding area shows an angry glow of orange. As more light appears, we see a solid vault of apartment houses around the small, fragile-seeming home.