If you’re eager to sell your home but haven’t had it priced in a while, you may be nervous about finding out how much it’s worth. Home prices will always change, never staying the same for more than a couple of years at a time: but has your home’s value changed in a way that will bring you profit?
This is everything you need to know about whether homes only appreciate in value.
Simply Said, No.
Don’t worry and start wondering ‘what is my home worth?’! Although homes can depreciate in value, it’s not the most common case. Most homes gain value over time and are expected to continue getting more expensive as they’re lived in.
Unfortunately, some properties, due to little or no fault of the owner, will drop rapidly in value. This can be a heartbreaking loss, especially if you invested hundreds of thousands of dollars more than the home is currently worth.
These are the three ways homes can depreciate in value.
1- Damaged Homes Lose Value
Natural disasters seem to be happening in droves in recent years. Currently, almost fifteen percent of homes in the USA are at risk of flooding, while others are at risk of wildfires, tornadoes, hurricanes, and so much more. If your home is damaged by these kinds of problems or has ever flooded, you’ll notice the property value drops rapidly. As disheartening as this is, usually, insurance will help you recover some amount of this money.
2- A Crashing Market Will Lower Property Values
Every few years, there’s a massive market crash that sees property values drop rapidly. Currently, there’s a lot of talk about one of these coming in the first or second quarter of 2023: but there’s no way to ever be sure. A crashing market will lower property values and allow less wealthy buyers to snatch up properties: but there’s no way to guarantee that this will happen, and eventually, prices will start to rise again.
3- A Neighborhood That Gains a Higher Crime Rate Will Tank Values
If something happens that causes your neighborhood to become less safe or trustworthy; you’ll notice property values start to drop. Fewer people will be willing to start a family in an unsafe neighborhood or will be willing to take the risk of buying a home in an area that’s doing poorly. This is a clear time you’ll see property values dropping.
In the Long Term: Usually
Although it can be scary to think about everything that can go wrong, a lot can go right! Homes generally appreciate in value and become more expensive over time. This means that you can rest assured that the house you bought in 2012 is now more expensive in 2022 and that it will probably be more expensive in ten more years. Even if the market tanks, property values generally continue to rise over time gradually.
Property Values Will Always Change
Over time property values will always fluctuate and change. This is a natural part of the inflation, the environment around them, and the state the property is in. While you’re looking at property prices for comparables: keep the environment in mind.
