Understanding What Drives Real Estate Prices

When you think about the ability to secure a given piece of property in the real estate world such as development like the vales, there are obviously some factors that must first be considered. After all, if home prices were only based upon what the building materials cost to make, then almost every home would have exact pricing and there would be no real estate speculation. Therefore, because of the fact that you know multiple things drive prices, then you also know you should be aware of the top price drivers for a given property and perhaps any other places in the world. Pay attention to the following so you are prepared to look into the specifics of real estate price drivers for your next purchase.

Schools

According to Bigger Pockets, schools not only influence the price of a given property, but they can also be one of the strongest influences across the board. There is consistency with this category and it does matter because you want to be aware of not only what would bring a property value up, but what would bring a property value up for most people. The thing about something like a pool is that it doesn’t add as much value because while many people would love it, others see it as a liability or as a chore to take care of constantly. With a school, however, you have something that almost everyone desires.

The reason that schools can effect pricing so much is pretty simple to follow. Almost every family that is out there cares about the education of their children. When parents find a good school, therefore, it means that the school has many people who are looking out for the children. It also means that the teachers and administrators are fairly well paid, and that means the taxpayers in the area have a certain level of income to be able to afford the district taxes. It also means that others have seen the good school district and have moved into the area in order to continue their children’s education in a great district. The success of the school continues to attract others from the outside, and that drives up property values.

Crime

The thing about crime is that it is essentially the opposite of the school example above. No one wants to deal with the crime, so they will either pay the police force and other authorities to stop it, or else they will move away. Every time someone moves away that could be less money in the public coffers to fund additional authorities, and that means the value of the properties starts to go down as crime rises.

On the complete other hand, if you can keep crime low then it means the local police forces are able to fully investigate every detail and they won’t be overwhelmed when incidents come up. In short, in areas where crime is low, people feel safe and real estate values are high. That’s why when you are searching for real estate with PropertyGuru in order to find one of the best buys you can, you have to be aware of the general crime statistics in the area or else you could be buying into a parcel that is both dangerous and will be costly if you try to resell it and it loses value.

Land Topography

The plot itself that you are buying will have a significant impact on the value of the market price. On the one hand, you could have a wonderful plot of land in a terrible neighborhood or out far away from the modern conveniences, but if you have privacy and the plot is shaped in a way where you can fully utilize everything including the view and surrounding scenery, then that property might be through the roof in terms of how expensive it is.

Meanwhile, if you have a terrible plot but it is in a good area, then you might still be paying more than you are comfortable with just to be in a so called good area. The key is remembering what is important to you, but try to remember the topography so you aren’t situated on a hill, have your property be cut awkwardly so you can’t use the land, or even be butting up against a set of railroad tracks or under a power line. All of these things could tremendously cut down on the property value.

Immediate Neighbours

You have to be cautious when you are looking for a home because the surrounding neighbors will definitely influence the potential value of your property. You might not think that they will have too much of an influence, but you have to recall you need to be aware of signs and red flags for what people do. Having an unkempt yard and property could show that the people aren’t going to pay attention to the details, and it could also mean that criminals and mischief makers will see the area as a target if they think no-one is paying attention and keeping things up to date.

Even The New York Times has done a piece on appraising home values and it only makes sense to think that what they say regarding the values of homes being effected by their immediate surroundings and neighbors is accurate. After all, why would someone truly want to pay top dollar just to live next to a home that is a mess, deal with people who as neighbors just don’t care, and even could attract pests and other critters. The fact is, even if you don’t like how appraisals work, your home is given a value and a portion of that value calculation is due to the surrounding properties and the general upkeep of the neighborhood as a whole.

Location

It wouldn’t be a true article about real estate if you didn’t mention location as an important factor at least one time. In short, people pay money to live where they want and they are more than willing to overpay if it means they can be close to all of their conveniences and amenities. To a certain extent it does make sense because if you can save both time and money when it comes to commuting all of the time then you could wind up being in a much better position compared to if you bought a cheaper property but did so far away. However, while location is one of the most important features, you also need to know what is important to you personally so you can see if the deal is worth it or not.

When you take all of these things into consideration there are at least a few items you need to consider before you buy. Obviously you should weight all of these depending upon your unique situation and also depending upon your personal needs. However, one thing is certain and that is as long as you are going to be looking for the perfect place to move into and call your own then you have to be aware of these factors long before you put a bid in on a house or think you have found the place of your dreams. Take the time to review this list when you are searching and you will be in a much better position overall.