Will That House You Have Your Eye On Increase In Value

Will That House You Have Your Eye On Increase In Value

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Impulse buying doesn't only happen at the grocery store, unfortunately people who "live for today" often choose their financial investments impulsively. We see it far to often in our industry, homebuyers allow their emotions to rule the process instead of looking at the home as an investment. 

There is nothing against spontaneous living, as long as you keep in mind the future investment and its potential before signing on the dotted line. 

Financial considerations in the home buying process go further than if the home is priced properly for the neighborhood or if you can negotiate a better deal. While we can't predict the future, nor do we have a crystal ball that can, there are some things to consider before moving into your dream home.

What determines the future value of a home

The factors that we use to determine a home's current market value are also used to consider its future value or weather the home has the potential to increase or decrease. These include location, current land values, market conditions for the area, the economy, condition of the home, size, age, layout and updates.

A good example of this in our current market is the Central Corridor or Midtown Phoenix; while about 5 years ago this area was not considered to be anything but prime real estate has now turned out to be one of the hottest area's in all of Phoenix. The foresight could have been seen 5 years ago as well. Planning had already began for new restaurant concepts, and anchor stores in strip malls. There was redevelopment happening on the commercial front that would change the landscape and drive people into these new urban centers. Land values were also a big factor as most of the properties in this area are larger than others in Phoenix. This is just one example. 

The two main ones to really concentrate on are location and land values. If you've ever heard somebody say "Its all about the location" listen to them, they are right! Location will always trump the physical structure as that can always be updated, rebuilt or renovated to fit the neighborhood; the location is fixed. Location is also strongly tied to land values, typically the better locations will fetch a high price since they aren't making more of it!


Using this information whens house hunting


Resist the emotional responses when house hunting; that doesn't mean don't get excited when you see homes you like, just take into account the whole picture. Keep in mind of your future plans and think how long you will be in the house for. Search for homes that are desirable or that have a lot of showings already scheduled (your Realtor® will help you) as that means there is a lot of interest. Don't be afraid of multiple offers; if lots of people like the home now, chances are there will be lots of people that like it when you go to sell.

Once you do find those areas, do some investigating. Drive the neighborhood and check local records to see whats coming up in the area. Check for new construction or new commercial buildings going up, especially restaurants. Are people moving into this area or away? You can also consider a few of these to help with your decision: 

  • The rerouting of traffic through the neighborhood in response to new development (commercial or residential) nearby.

  • Plans for a nearby hospital, shooting range, power plant or waste facility.

  • The neighborhood’s zoning. A multifamily designation may mean that you will one day be living next to an apartment building.

  • Check local regulations if you’re concerned about the possibility of losing your view or even the amount of sunlight your landscaping receives if your neighbor decides to add a second story to his or her home. A view is worth money – lose it and you lose value.

Check the nearby schools and their ratings. Check to see what schools fall into the district you are moving into. Homes near great schools are always in high demand and will hold their values over less attractive school districts. Other amenities that can boost Image titlethe value of a home are:

  • Parks – passive use parks (those without playgrounds, ball fields, etc.) tend to raise home values while active use (mainly because of the traffic and noise they attract) do not.

  • “Active” transportation amenities, such as bike lanes, walking and biking paths and trails — homes in what are considered bike-able and walkable neighborhoods are worth far more than homes that lack these features.

  • Nearby Sprouts, Trader Joes, Target, Starbucks or Whole Foods – these businesses actually have a positive impact on home values. Some however, such as Starbucks, have shown to cause a corresponding rise in property taxes.

Check the HOA documents – if the home is located in a managed community, the Homeowner Association documents will let you know how residents are allowed to use the neighborhood. From landscaping requirements to parking prohibitions, this is important information that my impact the home’s future value, either negatively or positively.

Advice about how to improve a home before putting it on the market is great, but if the home’s location is undesirable due to any number of factors, all the improvements known to man and woman won’t raise its value. The time to ensure you’ll realize a return on your investment is before you invest the money.


Michael Fabbro Headshot
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Phone: 480-252-5536
Dated: April 13th 2017
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