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From the Global Stage to Your Backyard: 10 Factors that Influence Real Estate Property Values
What Factors Influence Real Estate Values
There are many things that affect property value in any neighborhood. During our research, we've found some interesting facts that you might find useful when listing your property. Keep reading to learn more about factors that influence real estate value.
1. Current Real Estate Market
The current real estate market has a big influence on the value of a property. When the market is good, there are fewer homes for sale, so property values in the area go up. Conversely, when the market is bad, there are fewer buyers and fewer demands which in turn may lead to below market value pricing.
2. Square Footage
Property value is usually determined by price per square foot. But, relying solely on square footage alone is not an accurate way to appraise the value of a property. For example, a 2,000 square-foot home with a 700 square-foot of garage should be listed as a 1,300 square-foot home.
In the United States, different regions may have different ways of displaying square footage. In general, square footage should only include livable space.
Did you know that on average smaller homes sell for more per square foot than their larger neighbors? Keep this in mind when considering price per square foot and your home value.
3. Number of Bedrooms
Since bedrooms are livable spaces, the more bedrooms a property has, the higher its value going to be. A 2,000 square-foot home with 4 bedrooms could be more expensive than a 3,000 square-foot home with 2 bedrooms in the same neighborhood.
4. Property Features
There are some features that affect property value in specific neighborhoods or areas. Luxury features such as an outdoor kitchen and swimming pool will increase home value in high-end neighborhoods or warm climate areas.
Having said that, there are other features that will certainly add value to your property:
- extra bedroom
- extra bathroom
- finished basement
- Outdoor living area
- open-floor plan
- smart home technology
5. Age of the Property
In real estate, there are two terms to describe the age of a property. They're called "effective age" and "actual age." The effective age usually refers to the condition of a house. When a house is newly redecorated, its effective age improves. This is where renovations come into play.
On the other hand, the actual age refers to when the house was actually built. For example, a house that was built in 1950 and recently renovated will be in a better condition than a house that was built in 1960 and remains unrenovated. That said, it is still structurally 10 years older.
6. Neighborhood Safety
The safety of a neighborhood greatly impacts property values in the area. Here are the things you should watch out for when inspecting a neighborhood's safety:
- violent crime statistics
- gang activities
- homeless population
- registered sex offenders
- proximity to a gun range
7. Comparable Home Sales
One of the factors that influence real estate value the most is comparable home sales (otherwise known as COMPS) in the same area. Taking the average of recent sales of similar properties is one of the best ways to figure out a home value. Don't pay attention to listing prices because those homes haven't sold yet. Look at actual sold prices in the area. For this reason, foreclosures and below list properties may potentially bring down the value of your home.
8. Noise Pollution
Very few people want to live in a noisy neighborhood, thus property values are lower in these areas. Several factors that could affect the noise level in your neighborhood:
- train tracks
- freeways or highways
- industrial zones
- nuisance neighbors
9. School Quality
A study by the Wall Street Journal reveals home buyers are willing to pay higher prices for homes in areas with good schools. One of the reasons is because parents associate good school districts with safety.
Another good reason to buy a home in a good school district is because parents could save a lot of money on tuition. High-quality public schools could save parents hundreds of thousands of dollars over time.
High ratings in all levels of education will help hold and or increase the value of a home. Contrairily, poor ratings may deter potential buyers and or bring the overall property value down.
10. Local Amenities
Another good indicator of property values in a neighborhood is local amenities. How far is the house from entertainment, recreational, or entertainment hubs? Other amenities such as hospitals, police stations, and fire stations could also affect home values in the area.
Sell Your House in a Flash
There are many factors that could cause property values to rise and fall.
Consider the ten bullet points above next time you're appraising the value of a property.
Don't forget to get a no-obligation quote for a cash offer on your home.