Appreciation rate trends and housing

from The Power Is Now Magazine | February 2021

The Black History Month

APPRECIATION RATE TRENDS AND HOUSING MARKET DATA

Emerick A. Peace

One of the real estate goals is to get a positive return on the investment when it is sold later. It is a no brainer to invest your money in something that wouldn’t yield even a 1% increase. Although there are times it happens that people lose so much from their investment, it is as a result of inefficiencies and happenstance that were unprecedented. But we are considering the profits, that is what investments are for. And at such, we’d talk about appreciation rate trends in the real estate market, which is an increase in the value of a real estate property over some time.

FACTORS THAT AFFECT APPRECIATION TRENDS

Price appreciation of property happens when there is an increase in the value of a property over time. Let’s say you purchase a house now for $100 and sell it for $1000 in the next decade; the profit you get from reselling the property is your price appreciation. This appreciation value or trend is dependent on several factors such as the location, future development plans, demand and supply, and the physical structure of the property in question. The property owner can impose an appreciation rate by renovating and repairing some things on the property.

HOUSING MARKET DATA

You don’t just walk into a city or town and find houses of your choice; that includes the physical structure and location. For real estate investors, things like location and physical structure are crucial in dealing with the housing market; even more crucial is the rate at which the property is appreciated, when, and how it appreciates. Therefore, the latest trends, research, data, and housing insights are known as the housing market data. This information enables any investor to know when, how, and where to buy properties and predict the price appreciation of their properties relative to the location’s sustainability. This information on the future housing market in a particular location will enable you to understand if your deal is good enough.

RELATIONSHIP BETWEEN VALUE, COST, AND PRICE

The cost and price of a property can affect the property’s value but cannot determine it. Let’s say you want to sell your property at $1500(perhaps the house’s actual cost is $1200), and your buyer doesn’t like the foundation or roofing of the house, maybe even the interior decoration. He can price the house at $800, lowering the value of the house. As the investor, you can either choose to sell it off or retain it for a better bidder. The buyer’s pricing doesn’t determine the value of the house in this case.

MARKET VALUE

To determine the property’s market value — the price a property is likely to be sold in a competitive or open market— an appraisal is needed. An appraisal is an estimate regarding the value of a property at a given date. It is widely used in the real estate market to make decisions regarding transactions. The market value becomes a yardstick to discuss the cost of a property in real estate dealings. Appreciation rate trends and housing market data is an essential criterion in real estate business. Both work together in guiding the investor in decision making: knowing if a deal is good enough, why a deal is important, and what to gain from a deal in the long run. While the appreciation rate is dependent on housing market data for an informed decision, the housing market data is dependent on the demography of the locale for predictions.

References

https://www.neighborhoodscout.com/tn/real-estate https://corporatefinanceinstitute.com/resources/ knowledge/valuation/price-appreciation/ https://www.google.com/url?client=internal-elementcse&cx=partner-pub-7178868422353721:7848419215&q= https://www.cmhc-schl.gc.ca/en/data-andresearch&sa=U&ved=2ahUKEwi1op_e37buAhWtShUIHVoK A7IQFjAIegQIAhAB&usg=AOvVaw3Bbj5IcNFvcDJD9Tc-zDwX https://www.investopedia.com/articles/realestate/12/realestate-valuation.asp