We are reader-supported. When you buy through links on our site, we may earn an affiliate commission.
Whether you are ready to buy your first home or you’re thinking about the future value of an existing home you own, having an idea of what affects property value helps you make wise decisions. It’s easy to get caught up in emotions when buying a house. After all, you’ll live there and make memories to last a lifetime. However, it is always best to remove some of the emotion from the process and think things through logically.
According to the National Association of Realtors (NAR), existing-home sales rose 24.7% in July. A lack of inventory combined with high demand drove the numbers. There are many things impacting how much a particular property is worth, but in general, market demand, available properties and location tell a big part of the story.
Here’s a peek into what affects property value for most homeowners.
A property’s location may be the most significant indicator of how much equity it gains. If you’re on the hunt for your first home or investment property, look for in-demand neighborhoods. Seek out the best school district in the area or places undergoing revitalization.
In urban areas, think about elements such as the walkability factor, if a university is nearby and whether professionals want to move to the location.
2. Average Age of Neighbors
Some neighborhoods seem to attract young families and professionals, while others fill with senior citizens. Look at the ages of the neighbors through online search tools such as Spokeo and NextDoor.
If you want a place that will be easy to resell, you either want a thriving neighborhood filled with young people or a mix of different ages. People tend to move to communities where their children will have playmates.
Pay attention to what other homes are selling for in a location. You can usually look up this information for free on your county property assessment website. If many houses are going into foreclosure and selling for pennies on the dollar, it can impact what you can resell your home for.
While you can’t predict everything that might happen in a neighborhood or surrounding homes, you can certainly avoid going into an area with undervalued houses.
4. Available Inventory
Now may be a good time to sell due to a lack of inventory and buyers trying to snatch up properties before someone else makes an offer. According to Kiplinger, it took most people a year to find a home and secure an accepted offer. There aren’t many things to look at, and what is available sells the minute it hits the market.
When buying in urban areas, you sometimes have pockets of very nice or revitalized homes, but in the next several blocks is a lot of crime. People may want to avoid these areas, and no matter how much you invest in revamping a home, you might lose out in the end as crime encroaches closer and closer to you.
Pay attention to crime maps of the surrounding areas. Look up sex offender registries as well. You may not want to buy next door to a registered offender both for the safety of your own family as well as selling the place in the future.
6. Growth Potential
Buying a starter home with two bedrooms and one bathroom? Look for a property with the potential to add on later. Space to expand can prevent you from having to move or even help you sell the place in the future. People often want to raise their children in the same home, but may need to expand as their little ones get older.
Ideally, buy a place with extra land for an addition or the ability to finish a basement or build up and add a second story.
Look at Small Factors
There are many other little things impacting the value of a home. When asking yourself “what affects property value” remember to also pay attention to big repair issues as well as minor cosmetic factors such as whether the place needs a fresh coat of paint and what the curb appeal is like.
Survey the neighboring properties. Do homeowners take pride in the appearance of the outside of their homes? Watch out for unkept yards or abandoned vehicles in the driveway.
Spend time driving around different locations and studying every detail you can think of from the way the homes look to nearby attractions. As you get to know various pockets in a city, you’ll know which areas have the most potential for long-term investment growth.