The homeownership rate in the U.S. is 65 percent. What do all homeowners have in common?
There’s no doubt that all homeowners want the value of their property to keep increasing. This way, they can sell later on at a good profit or use the equity to access credit. It’s not uncommon for homeowners to invest in small upgrades and remodels to help their properties gain more value.
However, did you know that there are things that can hurt the value of a property? In this article, we’re sharing a number of things that can devalue your home.
Let’s get started!
1. Deteriorating Neighborhood Conditions
When you were buying your home, you were keen on many things. But, arguably, top on the list was the state of the neighborhood the home was located. In fact, you probably already had a neighborhood in mind, solely based on its reputation.
Most neighborhoods, especially those in upmarket areas, keep on improving or at least maintain their conditions. Unfortunately, there are instances where a neighborhood can start to become undesirable to residents.
An increase in burglaries and other insecurity incidents, deteriorating roads that aren’t getting fixed, and an increase in commercial activities are some of the things that can cause a neighborhood to lose its glamor.
In such a neighborhood, property prices can start to decline if the said conditions don’t improve. More and more prospective home buyers will start avoiding the area, which will see homes on sale sit on the market for longer periods. In an attempt to find buyers, most sellers will be inclined to lower their prices.
Unfortunately, homeowners don’t have much control over what a neighborhood becomes. While homeowner associations or groups can join efforts to fix issues such as bad roads, some matters can be out of their hands. Increasingly, selling the home and moving to another neighborhood will become the more attractive option.
2. A Sluggish Economy
This is another factor that homeowners can’t control.
The economy has a direct impact on the housing market. When it’s thriving, more people are in the market for homes. This increased demand can cause property prices to start trending upwards in most markets.
A slow or recessive economy will have a negative impact on the housing market. The demand for houses will go down, shifting their prices downwards as well.
If you’re a homeowner looking to sell and cash in the most money, it’s not advisable to sell your property when the economy is struggling, unless it’s clear that prices are high.
In addition to a slow economy, a buyer’s market can hurt property values. Ironically, a buyer’s market can exist even when the economy is strong. This occurs when the supply of homes is far greater than the demand, causing prices to go down.
3. Chaotic Neighbors
Most of the time, we don’t get to choose our neighbors. We just hope that they’ll be decent people who can turn out to be great neighbors.
Unfortunately, there are neighbors from hell, and there’s little you can do about it. Of course, you can do some research on your immediate neighbors when you want to buy a home, but even if they’re great, there’s no guarantee they won’t sell the home, opening the doors for you to have new neighbors.
Neighbors with chaotic behavior, such as playing inconsiderately loud music and picking quarrels with people, can impact the value of your property.
Let’s say you’re looking to sell and every time a prospective buyer comes to see the house, they have to drive past a neighbor playing loud music. The might like your house and all, but don’t be surprised if they put in an offer that’s below the asking price.
You can file a complaint with the management of the estate or even with authorities, but often, there’s only so much you can do.
4. Unattended Repairs
This is a no-brainer. It’s also something you have complete control over.
Over time, your home will experience wear and tear. Some of the issues can be fixed through routine maintenance, but others will need major repairs.
For example, if your basement is leaking, it will need waterproofing. The cost to waterproof a basement can range from as low as $600 for minor fixes to as high as $10,000 for major fixes. If it’s a major fix, expect that it will deal a big blow to your home’s value if it goes unfixed when the home is one sale.
Generally, you want to make all the repairs a house needs before you put it up for sale. Most buyers don’t want to assume the responsibility of repairing the house, even when you’re willing to factor in the cost of the repairs in the asking price.
Some parts of the home will need complete replacement instead of repairs. For example, repairing an aging roof can only achieve so much. Replacing it is the better option, especially when you have the home’s value in mind.
5. Irrational Upgrades
Making home improvements is a sure way to bump up the value. For instance, a kitchen remodel can yield an 83 percent ROI.
However, not all upgrades will yield a return on investment. In fact, some can hurt your property’s value.
For instance, repainting your home’s exterior is a good move if the paint was wearing off. But if you choose awkward colors that doesn’t impress anyone or don’t fit in with the theme of the home, its value can drop!
When making home improvements, don’t just do what makes you happy. Consider the current trends as well, and try to be as neutral as possible.
Understand What Can Hurt the Value of a Property
Buying a home is an excellent investment. Over time, most properties will gradually increase in value, adding to the wealth of their owners.
However, an increase in value isn’t automatic. There are factors that will actively hurt the value of a property. Some factors, as we’ve demonstrated, are in your control and others are not. Your property shouldn’t lose value because of factors you can prevent.
Stay tuned to our blog for more home and real estate insights.
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