Real Estate Appreciation for Beginners: What You Need to Know
The term appreciation is an increase in the value of an asset over a period of time – in the case of this article – real estate. This increase can happen for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates.
Appreciation and Investing
Appreciation is like any other form of real estate investment, and that is because it will take place regardless of what you are doing to the property in question. It doesn’t matter if you live there, rent it out or are leaving it vacant for the time being, appreciation happens over time either way. This is why it is such a wonderful opportunity for investors – not matter what you are currently doing with your property, you are making money in the long term.
I’m Confused, What is the Difference Between Appreciation and Depreciation:
Some assets and investments are given to appreciation, while other assets tend to depreciate over time. Real estate, stocks, and precious metals represent assets purchased with the expectation that they will be worth more in the future than at the time of purchase. However, automobiles, computers, and physical equipment gradually decline in value as they progress through their useful lives.
What Factors Impact the Speed and Amount of Real Estate Appreciation?
Planned Future Communities
A planned community is one that is generally larger in scope and offers more desired amenities than traditional developments. These communities often include a number of recreational amenities and a variety of housing styles. Research shows that residences in communities that are planned out so meticulously are able to command between 5 and 10 percent price premium over comparable housing. In terms of investments, this means that real estate in these areas is a much better investment.
Proximity to Major Events Such as Major Sports Games and Concerts
It is no secret that we as a society get excited about our favorite sports team coming to our city, or our favorite band playing a show nearby. In general, people enjoy being able to go out on the weekend and enjoy themselves, whether you are a basketball fan or a fan of indie rock, having games and concerts that are easily accessible can be an extremely attractive factor when looking to buy a property – and the development of a new stadium can be a HUGE asset to investors looking to see their property appreciate over time.
Public Transit
Why do so many investors invest in properties that in still being developed communities? Neighborhoods today that is still being developed are sure to have and to be easily accessible by public transit. Properties that are located in areas such as this are fantastic options for real estate investors and homeowners alike. If a property is situated along transit lines, it is probable to expect that it will also be located close to business and commercial areas. In terms of appreciation, even if those areas are not built up yet, over time, with the accessibility of public transit they will be, which will add more demand for real estate in that area.