Several Factors Influence Real Estate Values
Real estate values vary from state to state and region to region. The factors that most influence these values range from population trends to economic, physical and governmental forces. One could say that real estate values are more fluid than stable.
Population trends affect real estate values as people age and move out of traditional neighborhoods. Evolving household demographics influence real estate values in that family makeup defines real estate demand. Double income, no kids couples will not necessarily seek a traditional colonial style home located in a family oriented neighborhood. Condo and townhouse values rise as more and more of these couples turn to other forms of housing. Empty nesters similarly seek out smaller properties in more adult oriented communities that are located close to banks, doctors and shopping districts.
Economic forces vis a vis the desirability of a particular parcel of real estate influence the rise and fall of the parcel's value. If a specific region sees a sharp increase in the number of people working from their homes, office space will decline in value. Conversely, if that same city experiences an influx of white collar office workers, it stands to reason that the value of that same office space will increase. Income levels also affect the type of real estate a particular area will support. No one earning $50,000 or less can afford a $300,000 house! Real estate values will be lower as a result.
Physical forces such as property location greatly influence real estate values. We've all seen how expensive lakeside or mountain cottage properties can be. That view from the front porch plays a major role in land valuation. Less dramatic factors such as a parcel's proximity to highways and public transportation also affect property values.
Governmental factors such as real estate assessments, taxes, school districts and public services impact real estate values to a great extent. Consider the town that has been able to attract a sizeable amount of commercial development within its borders. That tax base generates enough revenue for the town that it can afford to offer lower tax rates to residential properties. Homes in these area become more desirable.