Ever wonder what determines the home values in your neighborhood?  Why is it that your home value is dropping while your neighbor’s home value remains the same?

There are a number of factors that are put into play when determining the value of your home…

• One important factor is the physical characteristics of your home. A larger home, in terms of square footage, is of course, going to be worth more than a smaller home.  Other characteristics include extra bathrooms, curb appeal, added features such as a wine cellar or a screened in porch; all of these will increase the value of your home.
• Another factor is the condition of the current real estate market. This factor has become the trickiest, especially in today’s market! During the times when the demand for new homes is high, and the number of homes available in inventory is low; property values will rise.  On the opposite side of the scale, when there are many homes in the inventory, and not a whole lot of buyers looking; the home prices will fall, as is the case today.
• Location, Location, Location!  One of the main factors to consider when determining your home value is where it is located; a home located on the water is obviously going to have a home value higher that a home that is not. This can vary from neighborhood to neighborhood, town to town and even state to state. Homes that are located in a more alluring location are less likely to lose home value during times such as we are experiencing today.

When examining the fluctuating home values between homes in one location, look back at when the homes were purchased.  Newer neighborhoods that saw their home prices rise rapidly during the housing boom have seen them fall just as quickly. In many cases, the lower priced homes were hit the hardest; these are the homes that brought in the investors.  During the real estate boom, many investors were purchasing handfuls of houses at a time, and a large percentage of these houses have now foreclosed, dropping the home value.

It appears to always come back to location.  Homes that were purchased in a more desirable location have not seen much activity with the values of their homes, even during a time when the a large percentage of homeowners are now upside down in their mortgage.