Home Prices: Need some help understanding why they appreciate?
Real estate values are constantly moving up and down. Generally, home values appreciate in the long term. But, in real estate there are no guarantees.
When your home appreciates you have more equity to borrow against, and you make a larger profit when you sell. But how will you be sure what you're purchasing now will appreciate over time? Property values in Greater Los Angeles change for many different reasons. The most important element to consider is that you go with a real estate agent who is familiar with the factors that affect local prices.
The economy is believed to be the biggest factor affecting real estate appreciation. Naturally, there are numerous factors on a national level that affect your property's value: unemployment, interest rates, quarterly earnings reports, and more. However, your home's value and the factors that play the most significant role in its appreciation are specific to the local economy and housing market.
Location in a community - Convenient access to schools, jobs and amenities like shopping, restaurants and entertainment is a big deal to many families and will greatly influence home values. So when it comes to holding their value, these areas generally appreciate much more reliably than areas lacking key features.
Recent sales - Your real estate agent should give you stats on the recent real estate sales in the regions that you're interested in. You'll want to know average time on market, selling versus listing price and more.
Appreciation history - Have house prices increased or decreased over the past 5 to 10 years? Is the area considered desirable because of its location or affordability?
The local economy - Are local companies hiring? Have companies moved into or away from an area? Is there a good mixture of business in an area, or does it rely upon just one industry? Is the blend of commercial and residential zoning changing? All these play a part.