List of Factors That Affect Property Value

Factors That Affect Property Value

The Global Financial Crisis or, the Great Recession during the late 2000’s have dramatically affected the real estate market. As a matter of fact, many economists consider this as the worst financial crisis, following that of the great depression in the 1930’s. Since many corporation, bank and other companies have had to close down, it does not come as much of a surprise that there also have been numerous downturn in the stock market all over the world.

Unemployment rate begun to increase, and as a result, eviction and foreclosure became an apparent pattern in the real estate world. Because of the expected increase in the inflation rate, the housing property sector have had to substantially reduce the rates involved in its purchase and acquisition. With the decrease of the interest rate and cost of residential property, the next logical question would be whether or not to purchase a residential property.

Since there had been numerous effects of the Global Financial Crisis of the late 2000’s on the real property market, deciding to acquire one should be given much consideration. It may be irresistible when one happens to chance upon a seemingly low-cost and low interest rate residential property deal, but keep in mind that while the deal may seem to be a win-win deal, there are other factors that could and may affect it in the near but unforeseeable future.

Some of these factors may be location of the property, the current and future inflation rate, and the long and short term effects of these factors on the property. If for example, a property that is being sold is located in an area where commercial structures are slowly but steadily being established, then it would probably be best to consider to acquire that property because its value has the great potential to increase in the future, based on the the possibility of that area to become a commercial area.

Since the inflation rate is an important and integral part of our everyday lives, knowing how to predict the future inflation rate can be a very useful tool in deciding whether or no to purchase a residential property; the Consumer Price Index, an index of the variation in prices paid by typical consumers for retail goods and other items, is the best source of information wherein one can use to forecast the future inflation rate.

Aside from the other usual factors affecting the cost o residential property such as, the condition, structure and size of the home, another factor that can greatly increase or reduce it is the neighborhood value. A neighborhood value is simply the sale ability of the other houses wherein a certain house is up for sale; this means that if most of the houses within the neighborhood is highly salable then anyone can bet their bottom dollar that any among the houses within that neighborhood is salable, and thus pricier than those in an area whose houses doesn’t seem sell to much.

So if you are looking to buy for a new house, keep in mind the factors that dictate and greatly affect the cost and/or interest rate of a house, so that you may fully discern if a certain house really does come with an appropriate price tag.