What Makes Your Property Value Increase?
Any property you own is an asset, and as you make your mortgage payments, you build up equity and property value little by little, year over year.
But that’s not all.
In most cases, a property’s value also increases over time, even more so in a new community as it develops. Sometimes, it’s just a moderate 1-2 percent increase. In a few cases, properties have seen a dramatic increase in value due to increased desirability.
While there’s no surefire way to guarantee your home is going to see a big increase in value over time, there are a few factors which consistently lead to higher returns on real estate.
Location Really Does Matter
We know it sounds cliché, but location is still one of the most important factors in determining a property’s value. In general, properties closer to desirable amenities and located in popular communities are going to be worth more.
For example, a new condo with a great view in the downtown area of a city could cost the same as – or more than – a 2,000+ square foot home in a nearby suburb. On the other hand, a home in a less desirable area is going to be worth less than a similar home in a safer community just a few kilometres away.
Here are some other location-based factors which could influence a property’s value.
School District Quality
Anyone who has kids – or who’s thinking about having kids – is going to be considering where they’ll go to school. In fact, a recent study found that 24 percent of recent home buyers were influenced by the quality of the school district when selecting a neighbourhood. And among buyers who were between 30 to 39 years old, over 40 percent considered the quality of the school district.
Typically, quality is defined by test scores, but some people will look for a particular type of school, such as a school that offers a religious-based education or one that’s known for having first-rate performing arts or sports programs.
Many new communities in Edmonton are located near brand-new schools which has a positive effect on home values in these areas. Your kids get a great education in a modern building, and if the school performs well in the near future, demand for property in the area will increase, raising property values.
Zoning laws dictate how people can use different parts of the land. For instance, land could be zoned for residential, commercial, or industrial purposes.
In general, most homes are located in residential zones. But if the municipality changes the zoning in a particular area, the property values may change. Sometimes, a residential area is rezoned to commercial but allows current homes to remain.
If the location attracts trendy businesses, the few homes located in this area are likely to see a dramatic rise in value because there’s an increased desire to live near the businesses paired with a limited housing supply.
New Commercial Businesses
For most homebuyers, convenience is of utmost importance. No one wants to drive 20 minutes or more just to get to the grocery store. This means properties close to popular stores and/or restaurants tend to have a higher value. And when new stores are built, homes in that area tend to go up in value.
This is a good reason to consider building a home in the early stages of a new development. As more phases are completed, commercial development follows. If you buy your home before the commercial businesses start developing, you could see a big increase in your home’s value after a few years.
Proximity to Nature, Trails, and Parks
Similarly, buyers want homes nearer to other amenities like nature, trails, and parks. Think about how nice it would be to have a hiking trail just outside your doorstep! In fact, a study by Statistics Canada shows that 48% of homeowners would like to live closer to green spaces.
This means you should be aware of the land surrounding the houses you’re considering. Many new housing developments include things like open green spaces and environmental preserves. Are those features going to stay? Because the flip side of this equation is that your property could lose value if the undeveloped land nearby is sold to someone who wants to develop it.
The Home Itself
Of course, it’s not solely about location. Part of the equation relates directly to the home itself. When you buy a home, you should focus on what makes it right for you. However, there are two main factors to think about.
Property Age and Condition
Buyers will pay top dollar for a home in move-in condition. Nobody wants to spend a lot of time and money fixing stuff up. If you’re planning to sell your home soon, a home inspection can tell you what’s wrong, and you can make those repairs to ensure there are no surprises when your buyer hires an inspector.
If you’re building a home, pay close attention to the quality. A good builder will pride itself on using high-quality products and processes, and you do have the option to add upgrades if you’d like. Once you move in, make sure you keep up with regular maintenance. A home that’s well taken care of will hold its value longer.
Usable Square Footage
Buyers will also pay more money for additional square footage they can use. A home that is less than 1,200 square feet can limit itself to a certain group of potential buyers. But you should also remember that people won’t necessarily pay a lot more for extra space if it’s not especially useful – think formal living room, eight bedrooms, or an in-home movie theatre.
Ideally, every part of the space should have a purpose. When you’re designing your home, think about how you can use each room. It’s often more affordable to finish a basement than to buy a bigger home, so be sure to consider all your options.
When you buy a home, you want it to increase in value over time so you’re really getting your money’s worth. The key to doing this is making smart choices with your initial purchase. Hopefully, you now have a good sense of what you need. Our Area Managers can help you invest in the right home for your future.
Photo credit: school kids
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