The housing market, neighborhood real estate trends, condition, age, location, and size of the property all have an impact on a home’s worth. In this article, we will discuss the Factors Which Influence the Value of Your Home.
There isn’t a one-set method for calculating how much a piece of property is worth, and many various elements might affect a home’s value. However, a select few factors have the most influence on property prices.
Both national housing trends and regional real estate trends are important. Condition, age, location, and size of the property are frequently given equal weight. These specifics, when considered collectively, can highlight house values.
Buyers can take them into account to make a more competitive offer, while sellers can utilize them to decide on a suitable listing price. Deed information about the top five elements influencing a home’s value is listed below.
Factors Which Influence the Value of Your Home
Prices of Comparable Properties
The listing price of a house will be influenced by nearby comparable home sales. How much did recently comparable properties in the neighborhood sell for? Knowing the worth of similar properties, or “comps,” may greatly help in estimating a home’s value. The goal is to find homes that are almost identical to the one in question.
Start by looking up local listings’ pricing on websites like Zillow and Realtor.com. The drawback is that, particularly in a busy real estate market, a home’s list price may not always fairly reflect its worth. A real estate agent may be more qualified to assist you in this way. They’ll probably have access to more recent and comparable information on house sales.
A recent National Association of Realtors (NAR) survey claims that one of the main motivations for buying a property is the desire to be nearer to places of employment, educational institutions, or public transit. Other elements that can make a community desirable enough to raise the value of a house include:
- Proximity to grocery stores, shopping, and entertainment
- Access to public transportation and major highways
- Available parking
- The quality of the local schools
- The crime rate
These elements might play a role in explaining why purchasers are prepared to spend significantly more money on some properties than on others that are only a short distance away.
A home’s value may be negatively impacted by the area if it is near an airport or a busy road, for example. If the location doesn’t suit the buyer’s lifestyle, a property that appears great on paper might not be that perfect after all.
The Home’s Age and Condition
A house’s age might reduce its value, particularly if it requires maintenance. Purchasing a fixer-upper might result in a variety of extra expenses. There are aesthetic flaws like a dated kitchen or a less-than-modern floor layout, and there are practical ones like faults with the roof or plumbing of the house.
According to a 2019 remodeling study by NAR, replacing a roof may cost over $7,000, while replacing an HVAC system may cost a homeowner over $8,000 in total. In general, older homes cost more to insure as well. Homes older than 30 years often have homeowner’s insurance premiums that are 75% higher.
Naturally, a five-bedroom home will likely cost more than a two-bedroom condo in the same neighborhood. Another factor is the size of the property that the house is on. A large backyard may be worth more to a buyer than an additional bedroom.
According to NAR data, the need for more room is often the second most common factor in house purchases. When comparing homes of various sizes, looking at the value per square foot of a property may be useful.
The State of the Housing Market
The property market frequently goes through cycles when buyers and sellers are favored alternately. Home prices often increase when there is a lack of supply, particularly if there is a spike in demand. Another crucial component of the problem is mortgage rates, which change depending on the state of the economy and other market variables.
Early in the epidemic, the Federal Reserve lowered its target interest rates, thereby making borrowing money more affordable. Home prices increased as a result, and the lack of available inventory combined with that created a seller’s market.
According to Zillow statistics, the typical sales price of new homes sold in January 2020 was $266,300. A year later, that figure rose to $346,400, a 30% increase. The median sales price increased to $423,300 in January 2022.
Nevertheless, soon things could start to cool off. Although the housing supply is currently at an all-time low, the Federal Reserve is projected to raise interest rates, which could keep home prices high.
Every property has its own unique Factors Which Influence the Value of Your Home. Your credit score is important whether you’re a first-time buyer or planning to sell your current house and buy a new one.
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