Property value is on the forefront of any real estate owner’s mind. If you’re like Ali Safavi Real Estate, we always want it going in one direction – UP.
To help this appreciation we do things like put siding on the house, invest in landscaping, put in a new kitchen, etc. These are all great – though not all are created equal. Make sure to read Ali Safavi Real Estate’s 4 Tips To Improving Real Estate Value. But there are a few things I bet you haven’t thought of. This post aims to shed light on a few not-so-obvious factors that can have a big effect on your home’s bottom line.
Ali Safavi Real Estate’s Hidden Factors
When your home is being appraised, the appraiser is going to give you a privacy score. The factors include: distance from neighbors, slope of backyard, density of the neighborhood, and a few other elements. Of course, the importance of these factor will vary from city to city. A resident of Los Angeles will have to literally build a wall if they want privacy, whereas in Michigan you may have a full acre to roam around in.
Speaking of backyards, what you see matter. If your home faces a lake or forest that bumps up the value. If you are staring into your neighbor’s tomato garden, that won’t help as much.
You wouldn’t think that the slope angle on your backyard would matter much, but you would be wrong. For some reasons homes with downhill slopes tend to be more desirable compared to homes with up slopes. Maybe it’s so the kids can sled? No slope at all remains the most desirable, but again this is an element that varies in importance from state to state.
For some reason the amount of house, in feet, that faces the street can be a factor that effects value. Homes can vary greatly from square to rectangle, and apparently in some states people want to see a lot of the real estate from the street.
Most of these you don’t have much control over. But if you know some of these factors may lower your value, perhaps that means you can up the value in other ways.
So now that you know how to evaluate a home for potential value, let’s look at how to evaluate the market.
1. Building Permit Issuance. When assessing supply factors in a market, it’s not only important to consider existing inventory but potential competition from new development. Since builders and investors are often competing for a limited number of renters, an oversupply of new properties can drive up the vacancy rate and eventually push rental rates down.
2. Economic Diversity. Strong employment rates at the local level are an obvious positive economic indicator, but so is diversity in employment across a wide range of sectors. Economies with one driving industry or factor can look attractive in a time of prosperity, but may come with a lot of inherent risk over time.
3. Rental Saturation. Understanding the percentage of the single-family housing stock currently being used as rentals (i.e., rental saturation rate) is a key component to understanding the long-term demand prospects, as many markets fall into either being a “buyer’s” or a “renter’s” market. Markets with higher rental saturation rates typically satisfy new housing demand with rental properties rather than home sales. Of particular importance is identifying markets that are experiencing rental saturation growth as it signals a shift in the market that could lead to increased rental rates and decreased vacancies.
Certain section of this article were pulled from Opportunity Knocks: 6 Indicators to Find Top Real Estate Investment Markets.