It’s crucial to understand what can be the cause of a home’s depreciation, and so here is a quick run-down of the most important factors.
Many factors impact the valuation of homes across the country, including demand for real estate, interest rates, and economic conditions. However, it’s a host of local factors that drastically affect your home’s value, some of which are in your control.
A home is one of the most substantial investments for most people. That being the case, it’s crucial to understand what can be the cause of a home’s depreciation, and so here is a quick run-down of the most critical factors.
Internal Factors
- Carryover Maintenance – Your home’s value significantly drops because of dated and damaged structures. It would help if you did frequent checks on your home’s structures and systems using a comprehensive checklist from the Department of Housing and Urban Development to keep tabs on your home’s condition.
- Outdated Kitchen and Bathrooms – An outdated kitchen and appliances stand out like a sore thumb and drastically depreciate your home’s value. As a result, prospective buyers always watch out for the state of kitchen appliances to shake off any possibility of upgrading costs.
- Home Improvements Not Done to Code – Any work done without a permit is a big red flag to savvy buyers. Aside from being illegal, you run the risk of damages such as pipe bursts due to code violations. Prospective buyers will bargain for a lower price considering the extra cost they’ll incur bringing the work to code.
- Poor Landscaping – Poor landscaping can shake off the value of your home by as much as 10 percent. Your landscaping should be at least at par with that of your neighborhood. See to it that regular trimming and mowing the lawn is done.
External factors
- Location Value – Homes with proximity to utilities such as schools, grocery stores, and public transport tend to have higher demand and depreciate at a sluggish rate. A decline in employment and population in the city can trigger a great deal of depreciation of home values.
- Local Foreclosures – A good deal of foreclosures happening in the neighborhood can cause a ripple effect of depreciating home prices. Foreclosed homes that aren’t well maintained and have been unoccupied for a considerable time in the locale weigh down the value of your home.
- Economic Environment – Adverse economic conditions affect demand in the real estate market. For example, with hardly any people looking for new homes, prices of real estate properties come tumbling down. In addition, people who’ve lost their jobs during recessions may have no alternative but to put their homes up for sale and this, in turn, creates a surplus of properties in the market, shooting down house prices. Also, asking prices for your home may drop at high speed if your home stays in the market for a long time.
- Neighborhood – Bad neighbors bring down the value of properties in the locale, particularly those with unkempt lawns and shabby homes. A registered sex offender in your neighborhood can also bring down the value of your home significantly.
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