Real estate represents the most significant part of anyone’s financial assets. Unfortunately, it can be the most volatile. Property values fluctuate based on a variety of factors. This makes for a more aggressive real estate market as buyers try to secure better loans for their prospective properties. If you are planning to take out a mortgage in Wichita Falls, some firms offer up to 100% financing.
So what determines a property’s value? Most look to the immediate influences, such as the property’s vicinity or its built-in amenities. While that is accurate, there’s more than meets the eye. Here’s a rundown of what determines a property’s price:
Trends in interest rates influence property values because they determine the industry demand. If interest rates dip, demand will go up because more people can afford the property. This will then bring the house’s price up with it. If it spikes, then the price inversely follows.
As a buyer, it’s vital to have an accurate and consistent computation of your potential loan payments. Fluctuating interest rates might mean that you’re paying more monthly than your initial downpayment.
One of the more obvious factors is the property’s location. This pertains to ease of transportation due to the property’s proximity to various locations: schools, business districts, shopping centers, and hospitals.
Property valuations also take into consideration the quality of these sites. The performance of nearby educational institutions or the employability and salary bracket of a city’s business district will significantly affect the value of properties within the same area.
Floor space and facilities
To give a more accurate reading of a house’s price, agents will usually provide a price per square foot instead of the total market price. This is because a house’s total lot area or floor space can vary. It might have a vast yard or multiple stories that give homeowners a lot of usable space.
Pricing is also affected by the house’s facilities, such as the number of bedrooms, the distance from the street, and whether it has an attic, a basement, or ample garage space.
The price of older, traditional homes can be set high because it’s built better and stronger than newer houses in the market today. However, its value can depreciate based on how much repairs and renovations it’s undergone.
Meanwhile, newer houses can also be more expensive since they have newer amenities such as plumbing and electrical wirings. Move-in ready units also affect the house’s saleability.
What’s the neighborhood like? If your prospective property shares its space with others that are priced luxuriously, then you can expect yours to be the same. This also gives a glimpse of the status of the real estate market in that region. If there are a lot of properties for sale, then that must mean that the market is struggling.
On the other hand, the region’s demographics – the average homeowner’s age, gender, work prospect, and the like – can affect property valuations. If the market is full of millennials or folks with retiring age, then expect the price to adjust to their purchasing power.
To an extent, even government policies and local legislations affect property value. Government-subsidized loans, incentives, tax credits, and deductions can all cause the demand to shoot up, possibly increasing the price of properties.
Legislative changes that affect employment and wage increases can affect the market’s ability to purchase property, and will thus cause the demand to adjust accordingly.
Try to compare as many properties as possible to see how each factor determines its value. While these are the most significant indicators of price fluctuations, consulting your agent will help you set the best price for your property.