What's It Worth?

Consider the Factors that Influence a Home's Value

Real estate markets have been in a whirlwind this summer and beyond. Appraisers have been perpetually busy, meeting owners who anticipate that the value of their home is apparent upon one inspection. It's not that easy. There are various approaches to value, but as I collect and refine the data, I find three key components that enhance or detract from residential property:

Utility: A home is for living. Filling that function effectively will increase value. That's why details like the number of bedrooms and baths are used as a way to establish worth. Utility is the most stable foundation of value, but it does change with society and family needs. For example, if the average household size in the neighborhood is just over two people, dedicating space to a fifth bedroom may limit a home's appeal.

Trends: Styles come and go. A home that was tastefully designed twenty years ago, with a formal dining room and wallpaper borders in the living room, looks in need of a makeover today, when buyers favor open floorplans and simple color schemes. Keeping current with market trends enhances value - but this increase is transient if the interior is not updated as tastes change.

Expression: Owners want their homes to reflect who they are, and choose interior features like flooring, wall colors and tile designs that express this. This is the least reliable source of dollar value. Sometimes other people see worth in these individual touches, and sometimes they may consider them negatives that must be changed. However, such special features may be the best source of personal value, providing constant enjoyment to the inhabitants. This intangible may be worth the cost, regardless of dollar value impact.

End note: Bankrate has advised me of the advice it offers to seniors going through a personal Utility/Trends/Expression transition -- moving from large homes where they raised a family to smaller ones that better suit an active retirement lifestyle. Check out the Guide to Downsizing.