What Makes Property Value Decrease? 5 Things
Just what makes property value decrease?
It’s often easy to see why a house costs less as time goes by, sometimes things are not so simple. If you’re concerned about the value of your property, here are five factors to consider.
1. Surrounding Environment
Regardless of the state of your house, there are many external factors that can affect property prices. A noisy bar that opened down the street, a new landfill commissioned by the local authorities, or the construction of a new power plant can all decrease the value of your house.
There is very little you can do about these environmental factors after you’ve bought the house. The only measure you can take is to be very careful to examine all external factors before committing to a real estate purchase.
2. Neighborhood Foreclosures and Short Sales
The value of your house is directly tied to the value of other houses in your neighborhood. Real estate prices are comparable. This means that if a house similar to yours is sold cheaply, the value of your own house will go down as well.
This effect is more pronounced when houses are foreclosed on and sold at the lowest possible price. If one or more houses in your neighborhood are sold that way, buyers will think twice before purchasing as they will worry about the future value of properties there. This drives prices even further down due to lower demand.
3. Increasing Mortgage Rates
Low mortgages mean that buyers can spend more to buy a house. When mortgage interest rates increase, houses become less affordable to potential buyers. This lowers demand, which drives real estate prices down.
If your house is mortgaged, it may be difficult to calculate its current worth. Learn more about how much your house is worth here.
4. Regular Wear and Tear
The value of a house drops as it gets used. The older a house, the more regular wear and tear it accumulates. Roof damage, a large carbon footprint, and even outdated interior design will all reduce the value of your house as time goes by.
The obvious solution here is to repair your house before selling it. The cost of the repairs is almost always worth it since it usually raises property value by at least as much as it cost to repair it.
5. Natural Disasters
Finally, natural disasters care nothing about property values and the real estate market. Wildfires, earthquakes, tornadoes, and floods can all decrease the value of your house.
Even if your house remains undamaged by nature’s wrath, buyers will hesitate if a natural disaster struck nearby.
What Makes Property Value Decrease? Now You Know!
Now that you know what makes property value decrease, you can plan out your estate with more efficiency.
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