This ARTICLE Is About The Main Factors That Impact The Value Of A Home
The Main Factors That Impact The Value Of A Home that affects home values is location. There are other factors that affect home values but the location is by far has the biggest impact on home prices. Home values on homes that are similar in size, square footage, and style greatly vary by region. For example, the average 2,500 square feet California home in Los Angeles, County averages $675,000 versus a similar $325,000 home in Nashville, Tennessee. Just by the region, the property is located, the price of the exact home in California is double the price than the Tennessee home.
We can further break down the home values within a state, county, city. Many homeowners in California can buy a similar home in other states for half the price. This is what is happening to many remote wage earners. With the coronavirus pandemic, many companies are offering their employees to become remote workers. Remote job wage earners now have the luxury of saving tens of thousands of dollars by relocating to lower-taxed states with affordable housing and low cost of living.
The Main Factors That Impact The Value Of A Home And Its Pricing
There are multiple factors that affect the pricing of homes. The key and biggest factor in the value of a home is the location. Other factors that have an impact on home prices are the following:
- Size of the property
- Comparable recent sales of like and similar homes within a 0.50-mile radius of the subject property
- Homes near railroad tracks, the main road, and backing into apartment complexes and/or commercial zoning can negatively impact home value
- The condition of the home
- Proximity to schools
- How the high school district is ranked by the state: High ranking school districts are considered very desirable and home values are higher
The above list is important for both homebuyers and sellers when buying and/or selling a home and pricing it right or buying it at the right time. There are certain factors such as landscaping, cleanliness, having an in-ground pool that may not have an impact on the home’s value but can make the subject property sell faster.
The Main Factors That Impact The Value Of A Home: Location
Many people heard the saying location, location, location. The location of the property is hands down the most important factor when it comes to the home’s value. Homebuyers want to buy homes in a good school district, close to proximity to highways, shopping, malls, work, childcare, and entertainment.
Gustan Cho Associates is an Illinois licensed real estate agent. A 3,000 square foot house in Chicago’s Austin Ghetto Neighborhood is substantially less than a 3,000 square foot home in Chicago’s Lincoln Park neighborhood. They said the following about the importance of location and price:
Location is key. Home values can have a big difference in pricing due to location.
Study Comparable Sales In Your Area
All homes that have mortgages will require a home appraisal.
- The lender orders the appraisal through an appraisal management company (AMC)
- The buyers, sellers, and loan officers cannot communicate with the appraiser
- The appraiser will do an objective home inspection on the subject property without any bias and come up with a market value
- The market value consists of data collection from the inspection of the property but most importantly, the most recent comparable sales similar to the subject property
- The appraiser will make pricing value adjustments on the subject property versus the recent comparable sales
- For example, if the comparable property had an extra bathroom, the appraiser will deduct the price of not having that extra bathroom on the subject property
- If the subject home has high-end finishes, the appraiser may or may not adjust the value on the expensive high-end finishes
- Renovations made to the property will affect the value of the property
- If you did a room addition and added an extra bathroom, the value will definitely go up
- However, if you just did renovations like painting, flooring, landscaping, new deck, outdoor kitchen, swimming pool, or other cosmetic renovations, there may not be an impact on the home’s value
- Larger lots may have a pricing premium
- Lakefront and golf front homes are worth more than homes that are located inland
The backyard backing into a green belt is another price premium where it increases the value of your home.
Importance Of A Top Rated School District
Parents will do anything for their children. Homes located in the top state-rated school districts have higher home values. An identical house that is across the street from another house in a different school district can have a price difference of 10% to 20% or even more.
The housing market is hot. Even with the coronavirus pandemic, the housing market is booming. Researching in the location you want to call home is key. You may need to buy a smaller home due to the area you want to live in is expensive. Or you may want more house for less money and travel further to get that deal. Whatever your preferences are, take time and talk about the pros and cons with your family. For home sellers, pricing the home right is key. Pricing a home right will render a quick sale. The most important factor in buying a home is location, location, location.