6 Factors That Influence Real Estate Property Value In 2020

Selling a house, whether you are a real estate agent or a homeowner, depends on a lot of factors. As a property owner, you might be tempted to recur to all sorts of home updates, in an attempt to increase home value, but unfortunately, the way a house looks is not the only aspect that influences price.

While you should be aware of what happens in your own back yard, there are certain other things that may play an important role in a house’s market value. A local event can influence consumer trust and cut down a significant percentage from the property value. On the other hand, a new shopping center or school nearby can add a few thousands of dollars to a home’s actual value.

In 2019, things did not seem to change much in terms of real estate prices, but as a new decade begins, it is only natural we want to keep an eye on what is changing, and not, within the real estate market. So, without further ado, let’s dive into the main factors that will influence house prices in 2020.

The economy

In an unstable economy, people will start to worry more about rising prices, salary cutdowns, or getting laid off, because job alternatives become fewer, therefore they fear they might be losing their homes. Sure, failing to pay one month of rent might only force you to find a different apartment, but missing on your mortgage payments will have a much worse impact on your life. Your credit score gets affected, you fear you might be losing your house, or be left with a huge financial hole to fill.

This is why, in a shaky economy, people will be more reluctant to buy a house. After all, why would you buy something you risk losing? This forces sellers to lower prices, or wait for a more appropriate time to sell. So, in simple terms, an unstable economy will impact consumer confidence, which is a direct indicator of how much people are willing to spend.

The supply and demand

Just like in any other market, the demand and supply will influence real estate property value, which is a pretty simple thing to understand. The bigger the inventory, the smaller the prices, because buyers have an entire pool to choose from, and vice versa.

For example, if there are more houses listed on the market, than there are buyers, it means that prices are going to decrease because the supply is much bigger than the demand. On the other hand, if there are more buyers than properties for sale, sellers hold the leverage, meaning they can afford to increase house prices because people are going to buy them anyway. You can usually see thins by the amount of time a house stays on the market. After, let’s say, 30 days if you are not selling the house, you need to think about lowering the price if you want to find a buyer.

Interest rates

As a seller, you may think that interest rates are only important to home buyers, but that’s not entirely true. Based on the supply and demand rule mentioned above, interest rates do have a thing or two to say in the way house prices fluctuate.

Lower interest rates allow for homebuyers to afford a home with a higher value, because it will allow for a bigger percentage of their monthly payment to go towards actually covering the mortgage, instead of interest, or vice-versa.

Let’s say, that, for example. Your buyer can afford a $500,000 house, with a 4% interest rate. If their interest rate increases by as little as 1%, they will only be able to afford a $450,000 house. This means you may need to decrease your price by as much as 10%, which is not exactly pocket money.

Location

The economy might be thriving, and buyers may be willing to pay good money for a nice home. But if the house is in a bad neighborhood, or too far from any amenities, you might still have trouble selling it for the average market price. Like it or not, a good neighborhood can add a few thousands of dollars to the overall house value.

Apart from a quiet neighborhood, with low crime statistics, buyers are also looking for a number of other aspects regarding the location. How close is it to a good school? Do you have a large grocery store or shopping mall nearby? Is there a beach or park that you can easily have access to? All these things can increase a house’s value, and any good real estate agent should know how to leverage them.

Home size and maintenance

Apart from external factors, what’s inside your own backyard account for just as much when figuring out the value of your house. The size of the house does matter, but the layout is just as important. A nice open floor plan may be worth much more than an extra storage room, for example.

Property maintenance is another thing to consider, and if you feel there is room for some slight improvements, don’t be afraid to do so. Composite front doors or double-glazed windows will not cost a fortune, but can tremendously increase the appearance and overall value of the house.

Atypical improvements

You may be very into gothic exterior design, but making such niched changes can significantly decrease house value, simply because there are fewer buyers that share similar tastes with you. You may think than stone-cladding looks nice, but in fact, it can be quite a turn-off for many.

If you want to make some small improvements, keep it simple and as plain as possible, to appeal to the general public. When people buy a house, they expect a blank canvas that they can transform to their own likings, without having to tear down walls or correct wrong renovations, so keep them to a minimum.