What Really Causes Property Values to Decrease?

What Really Causes Property Values to Decrease?

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Purchasing a home is often the largest financial investment that a person makes in life. In the ideal world, your home would continue to increase in value year-over-year.

However, in the real world, the value of a home can decrease. Understanding what causes property values to decrease will help you to determine if there are factors that are out of your hands, if the time is right to sell, or if you can take action to encourage appreciation.

The Economy can Impact the Value of Your Home

The economy is one factor that causes property values to decrease. As a general rule of thumb, a struggling local economy that doesn’t have a stable job market can contribute to a reduction in home values.

The national economy can also cause reduce property values. For example, the 2007 recession caused a sharp drop in home values across the country.

Understanding the Negative Impacts of Environmental Concerns

According to a recent University of California at Berkeley study, the construction of a power plant within two miles of a home can reduce the value by as much as seven percent. Other environmental factors that can reduce the value of a home include:

  • Close proximity to landfills
  • Changes to the flood zone maps that place your home within an active flood zone
  • The construction of nearby busy roads with a higher speed limit
  • Recent floods, earthquakes, hurricanes, wildfires, mudslides, tornadoes, or other natural disasters

Natural disasters can not only threaten your property, but they can also negatively impact your local community for years after the event.

flood zone causes property values to decrease

For example, a hurricane might alter the flood zones, which could make your home more susceptible to flooding. Potential buyers might be cautious about purchasing a home that is in the new flood zone and requires flood insurance.

Can Surrounding Homes Cause My Property Values to Decrease?

Appraisers typically use recent transactions on similar neighborhood homes to assess the value of your property. Unfortunately, if surrounding homes are appraised at significantly higher values, then your hone can look less valuable by comparison.

Conversely, if the surrounding homes are priced too low, then they can cause your property value to decrease as well. Finally, the value of your perfectly maintained home can still decrease if the local neighborhood is filled with eyesores.

Costly Repairs and Needed Updates can Reduce the Value of Your Home

Does your home need a new roof? Is your HVAC unit out of date? Do you have a long list of in-home repairs that seems to grow longer by the minute?

roof needing repair drags down home value

If your home is in need of costly repairs and updates, then its value will decrease over time. Fortunately, you can reverse the downward trend by completing the necessary repairs and upgrades.

Local Foreclosures and Short Sales can Lower Property Values

If your neighborhood has a surplus of foreclosures or short sales, then the fair market value of your home will decrease. In fact, the presence of foreclosures or short sales can make many prospective buyers hesitant about purchasing the nicest house on the block.

With this in mind, foreclosures are a typical sign of market instability. An unstable market often causes property values to decrease.

Take Action – Sell Your Home As-Is Before the Value Decreases

If you know what causes property values to decrease, then you can better determine what items you can fix, and what factors are out of your hands.

The good news is that if you are ready to cash in on your property before the value decreases, then you can sell it as-is to HomeGo. Avoid making costly repairs or updates, say goodbye to a neighborhood filled with foreclosures, and avoid the risks associated with local environmental concerns when you sell your home to HomeGo.

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.

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