Factors in Real Estate Price

Friday, April 17, 2015

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Divergently Similar Homes: Factors in Real Estate Price

For some, the home shopping search begins and ends with the look and amenities a home can offer, but market veterans known that there are many more factors that impact the value of a house. While real estate in Sydney and other premier cities in the country may represent desirable commodities in general, these less apparent aspects of a property’s location can mean that a similar space can vary greatly in price based on its location.

Associated Land
No matter how finely appointed a home may be, the fact is that the structure itself depreciates over time due to the inevitable wear and tear on any building. In fact, it is the land on which the structure rests that holds most of the value for a property, as land is finite and always in demand. Property prices are directly intertwined with the supply and demand for land in an area, and while a house can and will deteriorate over time, land is a much more realistic appreciating asset due to its permanent nature, particularly in a developing neighborhood.

Investment Potential
Many home sellers treat their homes as assets as much as living quarters, and so the future value of a home has an effect on its current price as well. Even a smaller or less attractive home in an area targeted for significant development in the near future can cost much more than a larger house in an area perceived as relatively stagnant.

Neighborhood Positioning
Virtually everyone knows that location is the most important factor in home buying on the larger scale, but the concept applies within neighborhoods as well. Homes on enclosed and low-traffic streets are likely to command a premium over houses on more frequently traveled roadways because they are perceived as safer for children and the elderly.

Average Resident Age
The average age of a community’s residents can be surprisingly indicative of a home’s market value. Home shoppers with young children are often willing to pay more for homes in neighborhoods with plenty of other children as potential playmates, and these individuals tend to fall within a specific age range. Neighborhoods that skew older can be less popular with growing families and can offer a slightly better value to some homebuyers.
Because of the varying needs of those in the home buying market, houses that seem almost identical can have vastly different prices on the open market. Understanding the myriad factors that go into determining a home’s value can give home shoppers the tools to find the right home for the right price.

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