The Factors That Affect Real Estate Value

There are a lot of factors that affect the value of real estate with some factors having a larger impact than others. Most of these factors are outside of the hands of the homeowner which can be frustrating when you are looking to sell or buy a home. However, it is important that you know what they are so you can better understand the price that you will pay or get for your home.

The Economic Indicators

One of the major factors that will impact real estate value is the overall economy. Key economic factors such as the GDP, income growth and unemployment will play a role in supporting house prices. When the economy is doing poorly, house prices will generally decrease because potential buyers do not have the financial stability needed to buy.

When looking at economic indicators, it is important to consider the location of the best real estate listings as well. An example of this would be a single state which has a better economy than the national average. If the state has an income growth rate of 1.25% compared to the national average of 0.9%, people in that state will be able to spend more on housing than other people in the country. This will increase the price of housing in the state.

Interest Rates

Another major factor in the value of real estate is the interest rates. This is important because it affects the rates that people get with a mortgage and whether or not they will be able to repay the loan. Lower federal interest rates will generally lead to lower mortgage rate offers from lenders which increases the number of mortgages being taken. When more people can get a mortgage, more houses will be sold and the price will increase.

The Property Location

Where the real estate is located will play a role in the value. However, most people do not know how location actually affects the price of real estate. If you are looking at residential real estate, the location will take into account key factors that impact your lifestyle. These factors can be the quality of the local school, the proximity to employment and the proximity of social centers.

These factors will not be independent of each other as a parent will want their child in a good school that is not too far away from where they work. The overall reputation of the neighborhood is another location factor that impacts the price. If a property is located in a good neighborhood, it will be more valuable than one located in a bad neighborhood.

The Upgrades And Updates

One of the lesser factors in commercial real estate value is the updates and upgrades that have been completed. There are some buyers who look for real estate that they can fix up and make their own. However, there are others who want real estate that is ready to use and has all the modern conveniences they want. In a residential property, a new roof will recoup 80% of its value while a new kitchen or bathroom can increase the overall value of the property.