What Factors Influence Home Value?
Have you ever thought about how price tags are put on houses? Well, we most certainly have, so here are the major factors that influence home value. Sharing is caring, they say.
This one is super obvious. When it comes to choosing a house, tons of people tend to first look into where the house is situated. No wonder location plays significant part in terms of home value determination. Maybe the house you’re living in is the perfect option for you, just for the sake of the fact that it’s located right next to your job, or near your children’s elementary school, whatsoever. However, when appraisers determine the value of a certain home, they tend to look more into a general picture, the one that’s less biased. Some suburbs have relatively better reputation than others, some areas have low unemployment or criminal rates, some are situated close to major recreational centers in the city and so on and so forth. That’s why there can be a huge price difference for two homes just couple of miles apart from each other. Now this is when owning a car comes in handy, am I right?
This one is tightly correlated with mortgage loans. Usually, when interest rates in the economy rise, the price for mortgage loans increases and this naturally means that less people can afford to get one. This will make certain portion of potential home buyers leave the market, thus demand for houses will start to fall down. What happens when the demand for houses is starting to drop? Well, the price for houses also begins to decrease. For more detailed information concerning the interest rates, demand and supply in the real estate market, you can take a quick look at Everything You Need to Know About Real Estate Economics, it will get you off the ground real quick.
Everyone knows that home value is tightly correlated with it’s size. And usually the value is estimated in terms of price per square foot. Other things equal, the bigger the house, the higher the price. Simple as that. On top of that, prices can also be determined in terms of number of bedrooms.
Usually, the new houses end up being valued more than the old ones. I mean, who would choose an old house over a new one if they had the choice? And then there is this whole issue about a house being haunted! Jokes aside, age really does make difference. The newer the house, the lesser the probability of any part of it needing improvements.
How well economy is doing can have a significant impact on real estate market. For instance, if there is some slowdown in economic activity, less and less people will be able to afford houses. This later on will cause demand for houses to decrease; and with less demand, prices tend to fall down. Conversely, if there is economic growth, more and more individuals will be able to afford houses, demand in the market will increase and prices will start to rise. Boy, how economy dictates everything!
Upgrades play quite important role when it comes to home value determination. The most important home improvements are kitchen/bathroom improvements, because such improvements end up being the most expensive and time consuming. Ask anyone who has dealt with home repair headache.
Come on, we don’t give enough credit to first impression and that’s something that shouldn’t be taken lightly. Home facade, street appeal, a cookie or two in the house, these are just as important.
All of these factors are more or less important, however a lot of us might have some criteria of our own. I mean, preferences differ, after all. That’s how it’s supposed to be. So in case you think there is anything we might have missed to mention, let us know in the comments below.