How does age affect value

Question

The comp (there are not many) I'm looking at is smaller and has a unit with one less bedroom but is 35 years newer (1955 vs 1920). I am just wondering how age affects value in general terms?

Brett K. · Answer

Hi Kevin,

When I'm appraising I won't make an adjustment for 'age'.  By itself, I can't prove it matters.  Other things like condition, style, floor plan, construction materials, and build quality have an influence.

Appraisers think in terms of 'depreciation' rather than 'age'.  If you have two houses that are identical and one is 30 years old that needs work and the other is 40 yrs. old house that was just remodeled then the 40 yr. old has less depreciation.  Sometimes you'll hear appraisers refer to this as 'effective age' as in 'the effective age of the 40 year old house is substantially less than the 30 yr. old house due to substantial renovation'.   -hope that helps.

Rick Baggenstoss · Answer

I'd buy a house from the 20's before one from the 50's if everything else were the same.  Typically, the layout, flow, room size, and quality of the construction of the 20's house will be far superior.

In a 50s house you have some of the same issues as a 20's house ... exterior walls aren't insulated, single pane windows, wood rot under bath and kitchen, plaster or concrete walls.

A big 50's house if nice and big can be a great asset for appealing to mid-century modern buyers.

An appraiser won't discern between old construction and older construction so it really depends on who you're targeting as your buyer as @Michaela Graham suggested.

Rick

Robert Leonard · Answer

Generally, when you are comparing properties that are over 50 like these, it comes down to the property's condition and if the neighborhood is retaining desirability like in trendy areas or areas that will always be wanted like historic or garden districts. The age of mechanical, plumbing and electrical are factors too.  If they weren't recently updated, you can factor that into your repair estimates.

No comps usually means slow to no activity in the area and that's a concern.  Whatever your exit strategy is, it shouldn't be something that is a quick sale.  Look for any listed properties in the area and call the listing agent.  Ask about how long they've been trying to sell that property and get an idea of what direction they think the neighborhood is going?

Michaela G. · Answer

Usually appraisers have a rule where any comp can't be more than 20% bigger or smaller than the subject property.

Also, age can make a difference in regards to the surrounding neighborhood.

For example, in Grant Park, a Victorian neighborhood in Atlanta, there are a few brick houses, that were built on infill lots in the 50's or 60's. On paper they may have the same sqf and other amenities as the other houses and thus an appraiser can technically evaluate it the same as a Victorian. But in the real world, a buyer that comes to the neighborhood to buy a Victorian, would only settle for a brick house at a big discount.

And in another neighborhood that same brick house would be seen as being superior.

So, it's all subjective.

Mary B. · Answer

It depends on the market. Atlanta for instance usually fare better on properties developed in 1955 and up because that's what buyers demand. Some buyers don't want anything older than 1990s in Atlanta. Southern Maryland has a lot of new developments as well. If buyers want older properties they'll be searching further towards Baltimore city / county. So I think its more like what has the most demand in which market that needs to be heeded. Definitely age does play a part in value.... oh and condos are certainly age driven when it comes to value.

I think it has to do in part, with the type of property building materials that were used back in the depression era vs those materials used post depression era...

Kudos,

Mary