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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. Is the house in a safe neighborhood? What's the community perception of the neighborhood? Is there fire and police protect? Is the home near major highways or thoroughfares? Is it near commerce? These are all questions you should be asking yourself when you go to visit a home.
- 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. Check to see what the house's square footage is, and be sure of the sturdiness of the foundation. Check bedrooms, bathrooms, total rooms. See if there's a fireplace, what kind of heating and air conditioning it uses. Look around basements, garages, and figure out what the utilities will likely cost you.
- Improvements. Essentially, has the owner installed any new features into the house in recent years that will make it more attractive? Has the kitchen been redone, is there new flooring, or have the walls been repainted? Check for outdoor improvements, too. You want to make sure that something has been done recently to keep the property up with the times.
- 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. A general rule to follow is that the value of a house is down when the market is flooded and when the economy is down. Otherwise, it's up.