What Will Drive Home Values in the Future?

What Will Drive Home Values in the Future?

Resale value is an important consideration in the purchase of your new home. Although it is impossible to predict what will happen in the future to the economy and the real estate market, buyer demand will continue to impact the ultimate value of your home. At the time of sale, a home is a “commodity”. Its value is determined by educated buyers who shop competitively in the open market. The transferable value of a property can be identified by comparing the size, style, lot, age and other measurable features with other properties that are currently for sale or have recently sold in the area. A home also has non-transferable value. This can be found in decorating, as well as features and upgrades which exceed the expectations of buyers in the price range. While these elements may make a home more emotionally appealing, they usually shorten the market time rather than materially increase the cash value of the property.


Terms affect price – The more liberal the terms, the higher the price the seller will obtain. The more restrictive the terms, the lower the price.

Location, location, location – Convenience to employment centers, schools, transportation, as well as lifestyle opportunities, drive buyer demand.

Buyers typically pay more for new construction – At the time of resale newer occupied homes may have to compete directly with new construction by discounting price.

The cost of capital improvements may not be fully recovered – Although future buyers may find improvements appealing, they seldom pay what they actually cost.

Deferred maintenance negatively impacts value – Buyers expect a property to be well maintained. The typical buyer will discount the value more than the actual cost of repairs.

Buyers seldom pay for the seller’s decorating – The seller’s decorating choices should be viewed as a cost of personal enjoyment. Neutral decorating appeals to most buyers and will typically shorten market time for the seller.

Buyers expect specific features and amenities within each price range – Buyers quickly discount the price if room spaces, quality and features are lacking for the price range.

Incurable defects have a dramatic impact on value – Buyers resist busy streets, unpopular floor plans, and properties that are inconsistent with the character of the neighborhood. Sellers of these properties should allow for longer market time or price below market to sell within an average market time.

Asking price drives value – Knowledgeable buyers respond quickly to inspect a new listing. An overpriced property suggests that the seller is unrealistic, which makes buyers reluctant to negotiate. Over time, when the price is reduced, buyers lose interest or are concerned that no one else desires the property. This puts the seller at a disadvantage and can cause a below market sale price.