Determining if a Home Will Increase In Value

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When buying a home, you’re not just making sure you have a roof over your head. You’re investing in something with hopes and dreams that it will pay off some day in the future.  And like any investment, there’s a degree of uncertainty involved.

Yes, we can analyze, project and speculate, but no one really knows how the future will play out, especially when it comes to the real estate market. That being said, there are things you can do to estimate whether or not a home is likely to increase or decrease in value over the coming years.

Here are some steps you can take to ascertain whether the home you are looking at is likely to be a wise investment.

Check Out The Local Trends

Homes don’t exist as islands, unattached to the world around them. The value of any given home goes up and down with the value of the neighborhood it is in and the city that the neighborhood is in.

So if you want to get an idea of what the value of a home has been in the past and what it will be in the future you should research home prices in its neighborhood and city over the past few years.

Trends change, so even if prices have been rising steadily for 5 years that isn’t proof that things will continue the way they have been. That being said, these trends are much better at predicting the future then any guesses you could come up with yourself.

Before You Buy a Home Have It Examined

Everything in this universe is subject to entropy, which means that all things are slowly falling apart. Homes start falling apart the second they are finished. That’s just a fact of life. Your question needs to be what condition the home you are looking at is in right now.

Looks can be deceiving. A home can look like new on the surface but if you look closely you might see that is is coming apart. Hence the reason it’s a good idea to hire a professional with a good eye to decide if it will need any serious repairs in the near future.

If you miss the signs you may end up spending more than you expected just keeping your home standing and that seriously hurt your chances of ever turning a profit on it.

Investigate Nearby Construction Projects and Plans

A few well placed construction projects can drastically change just about any neighborhood for good or for bad. For example, if you find that a new and cutting-edge school is getting built then you can bet that the value of the homes surrounding it will start to go up.

On the other hand, if a prison or a strip club pops up nearby then prices are likely to fall. To learn about the kind of construction going on in any given location you can simply drive around and visit construction sites and inquire about time frames and project plans slated for the future project plans.

This is also an area where having a real estate agent can be very helpful since they tend to keep up on construction projects as part of their job.

Ask What You’re Willing to Do

There are all sorts of signs you can look for when trying to predict how the value of neighborhoods and individual houses, but the biggest predictor is the homeowners themselves. Even if a neighborhood goes bad, dedicated owners can make sure that their homes don’t lose too much value.

On the other hand, lazy homeowners can easily destroy their home’s value through inaction and poor choices. Do what you can to see the trends but you can’t rely on them. Once you buy a home you have to continue investing in it if you want it’s value to rise.

Take A Long-Term View

If you want to make money quickly buying a home then what you’re interested in is flipping homes, not becoming a homeowner. When you seriously invest in a home you can’t get too caught up in what it will cost next month or next year. Instead, you’ll have to adopt a longer view.

The future can’t be seen, it can only be viewed through a fog of estimated uncertainty. Your job isn’t to try and accurately predict the future, it’s to do the research that you can and make the best estimate possible, given what you know.

Generally speaking, a home that is taken care of properly will almost certainly increase in value as long as nothing catastrophic happens to the surrounding area.

The population of America is growing and everyone needs a place to live, so as long as some kind of demand for housing exists in an area prices will rise. Most of the time it is just a matter of riding the wave of the ups and downs of the market until you finally get where you want to be.

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