What Factors Affect Home Value Most?
Today’s housing market is affected by a set of factors that nobody has seen for at least thirty years. In many parts of the country, home prices have been in free-fall for a couple of years now. The glut of foreclosed properties in many areas drags down home values across-the-board; in other areas, the number of houses (foreclosed or not) for sale tends to water down market values. Still, many of the same factors that real estate agents have talked about for decades are still as true as they ever were:
- Location, location, location. How far is the home from shopping, major highways or commuter routes, schools or other attractions? As it always has been, location is still a huge deciding factor in calculating market value of a house. Location can come into play in even more arcane ways. A house on a quiet side street is probably worth more than one on more of a major thoroughfare a block away. A house in the middle of a street may appraise for more than one at the corner. A house on a quiet cul-de-sac may bring even more money.
- Demographics. Is the neighborhood populated more with young up-and-coming professionals, or baby boomers, or retirees? The demographic makeup of the area can have a big impact. How many rental houses are on the street? What are the neighborhood’s crime statistics like? Is it near an industrial area, a landfill, a power plant? All those factors can drag down a home’s value.
- Condition. It goes without saying that a house that’s well-maintained will bring more money than one in rough condition. That also takes into account the old “curb appeal” factor…just doing things like sprucing up the house’s front door, front yard, landscaping and fascia/trim can make a big difference.
- Fashion. It may seem trivial, but fashion affects home values too. Stainless steel appliances and an island kitchen are “in.” Avocado-green appliances, shag carpet, dark cabinets and a sunken living room are “out.”
- Improvements. Things like nice landscaping, a privacy fence, a well-designed extra bathroom or bedroom can all boost a home’s market value. A carport or garage that’s been turned into a spare room or rec room…iffy. A pool, even though it’s a popular investment, is usually a horrible one at resale, returning maybe 40% of its cost.
- Market. Most of the areas that had the biggest surges in home values during the housing bubble (Las Vegas, Florida, California) now have some of the biggest foreclosure rates and the most battered home prices. Until the market “levels out” again, that is going to continue to be a problem when it comes to selling a home in those areas, and no analysts seem to be willing to hazard a guess as to when that leveling-out is going to happen.