How to Tell if a House Will Appreciate in Value

A house is considered a sound investment because its value, in general, appreciates over time. However, not all properties appreciate the same way. This post will help you find a home that will likely appreciate in value.

If you’re trying to analyze a home’s appreciation potential, there are some factors that you need to consider. First is that there is no foolproof way of determining how much a particular house will appreciate. 

While you can find a lot of online home appreciation calculators, you need to understand that each home is unique. Thus, it is best that you don’t rely heavily on automated results. Instead, there are signs that a particular property will increase in value over time that you can watch out for.

Positive Home Appreciation Signs

·      The location is ideal. – You often hear this in real estate circles, but it is definitely true. The location matters. If a house is situated somewhere people would love to reside in, and where they want to stay permanently, then you can say it is a great indicator of home appreciation.

Various things may indicate a good location, such as:

Ø  An up and coming community

Ø  A community within a top school district with local schools nearby

Ø  An area that is targeted for major development such as planned housing projects or being connected to major city infrastructure.

·      It is a smaller house. – You may think that a smaller home isn’t likely to appreciate more than its bigger counterparts. However, when you think about it, it is just a matter of doing a little bit of math. Take two houses located in the same neighborhood on approximately the same size of lot. They would probably appreciate by a similar amount. Now, that figure would be a bigger percentage of a cheaper structure, and this means a bigger appreciation amount.

·      The property has its own value. – The logic used above works primarily because of one reason. The property accounts for a big chunk of the value of the real estate. Land has a more reliable appreciation rate than the structure it holds. It is easy to understand considering that buildings and other structures get run down over time. Land doesn’t experience the same fate. Thus, there are certain property types that have a bigger potential for appreciation, regardless of the type of structure is built on it. 

·      The home may require a little bit of work done. – The key phrase is “a little bit.” House flipping is considered risky. This is because major fixer-uppers usually come with surprises, which you often see dramatized in home makeover shows on TV. However, houses that require just moderate amounts of work that can be completed within a short time shows better return on investment or ROI for homeowners. In contrast, you can get a newly built home in tip top condition. Thus, it does not leave as much area for improvement.

·      The housing market in the area is strong. – Some local housing markets tend to start off hot, then begin to cool off after a while. There are other markets that consistently remain strong over time, unlike others. An experienced real estate agent can be considered an expert on the matter, and can help you analyze trends over specific time frames to spot the neighborhoods with stable and strong markets. Usually, these neighborhoods are proximate to large and dependable employers, as well as big universities. 

Are you considering getting maximum returns on your property? Although there are fixer-uppers that can be considered a gamble, it is still possible for you to find properties that require some serious work, but will eventually prove to be great deals.