The celebrated phenomenon of your home’s value increasing over time. The more your home appreciates from the purchase price, the more profit you’ll bag at resale. Appreciation won’t passively manifest. You’ll need to maintain your home’s condition and keep tabs on your neighborhood’s development to secure a value rise.
Real estate market factors
Supply and demand
Property values rise when a low supply of homes for sale meets strong buyer demand, as buyers compete in bidding wars to secure a home from the limited inventory.
“We definitely have seen an increase in home values recently and the biggest factor driving that currently in my market is lack of inventory. Communities will normally have 15 to 20 houses for sale and, right now, there’s only four. So if any of those are desirable at all, the owner’s going to get top dollar for that home right now.”
The housing market doesn’t directly correlate with the strength of the economy, as we’ve witnessed with 2020’s strong housing market, despite economic woes brought on by the COVID-19 pandemic. Nonetheless, these economic factors strongly influence property values, increasing or decreasing buyer demand and the perception of value.
“In our Las Vegas market, values increase more and at a faster rate based primarily on proximity. If you’re in one of the suburban areas like Summerlin or Green Valley, the accessibility and amenities make a huge difference. In Summerlin you have parks, playgrounds, trails, views, activities, top-rated schools, Downtown Summerlin with shops, restaurants, casino and hotel. Depending on your neighborhood you can easily walk or bike to the central shopping district.”
Cost of borrowing
When mortgage rates are low, more buyers step into the market, seeking to save thousands to tens of thousands of dollars over the lifetime of their mortgage. If the housing inventory in a market lags behind this increase in demand, then the property values rise in the impacted area.
Strong job creation often leads to an increase in buyer demand as prospective home buyers gain financial strength and stability from new jobs to purchase. Property values increase in regions experiencing job growth, as incoming workers compete for the housing supply close to business centers.
Often going hand in hand with job growth, population growth increases buyer demand, leading property values in desirable neighborhoods to rise. I live in Summerlin. When people move to Las Vegas, that particular area that’s very desirable, then of course property values rise there. That’s supply and demand. That’s all supply and demand.
Age and condition
Home appraisers rate your home’s condition based on the amount and degree of repairs required, focusing primarily on the integrity of your home’s structure and the functionality of your home systems (heating, air conditioning, water heater, etc.). Buyers in particular take note of your home’s age based on the quality and design of elements like fixtures, hardware, tile, and energy-efficient features. When you maintain your home from a structural and aesthetic standpoint, you improve your property value.
“A few upgrades that buyer’s take considerable notice of is a new HVAC system, energy efficiency, exterior features such as landscaping and patio coverings as well as the condition of the roof.”
Curb appeal and landscaping
Sprucing up your home’s exterior so that it shines from the street will pay off. In HomeLight’s recent Top Agent Insights Report, over 94% of agents agreed that amazing curb appeal equals money in your bank account at closing. Going hand in hand with exterior appeal, lush landscaping raises property value, with 75% of top agents believing well-landscaped homes are worth 1% to 10% more than those without landscaping.
Renovations and updates
Las Vegas boomed in the early 2000’s and then again within the past 5 years. Styles have dramatically changed and so we have a large amount of homes that are now outdated in comparison to the newly built. Some of the things that I suggest when going to take a listing are to refinish the cabinetry in white, consider new granite or quartz countertops, a fresh “new” neutral paint job and a landscaping spruce-up.
If remodeling, the most bang for the buck is in flooring, kitchens, baths and the backyard. Adding a pool will only appraise for up to 20k more but if you’ll gain satisfaction from it over the years it will definitely add value in that it will make your home very desirable down the road.
Property values increase (or decrease) at different rates in different locations, even at times varying drastically in adjacent neighborhoods. Let’s explore some location-based influencing factors:
School district quality
Data from the National Association of Realtors reveals that 26% of recent homebuyers were influenced by the quality of their school district when selecting a neighborhood. Among buyers ages 30 to 39, that percentage jumps to 46%, followed by a 36% increase in buyers ages 22 to 29.
When a school district performs well — as deemed by grades given by the state and ratings by greatschools.org — buyer demand rises in neighborhoods nestled in that district’s zone, driving property values up.
Zoning and commercial
Zoning laws dictate how areas of land may be used for residential, commercial, or industrial purposes. When a municipality transitions zoning in a particular area, property values may shift in response to new opportunities to use the land. For instance, let’s say that a city rezones a residential zone into a commercial zone and grandfathers in existing properties. If the area is attractive and trendy businesses move in thanks to rezoning, those residential properties’ values would rise due to increased desirability paired with a limited housing supply.
Check-in on your property value for smarter home decisions
By regularly checking on your property value, you can determine whether your home is appreciating or losing value over time. When you’re ready for a deeper dive into property value analysis, reach out to us and we can prepare a detailed report. We have the expertise on value shifts in your market to help you make informed decisions on your property.
Contact Us for a personalized report with details about your neighborhood and comparable homes that have sold or fill out the form.
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