Everyone recognizes that appreciation varies among neighborhoods because location, schools, accessibility and the services and stores in the area, are all elements of value. But within the same neighborhood it is also true that homes may experience varied rates of appreciation.
Yes, condition is a primary value foundation. But even in an area where all the homes have similar degrees of condition excellence, say in a newly-built community, there are still variances in the appreciation that can make a significant difference in the ultimate investment value of a home.
According to research by Realtor.com:
- Size – Small homes are in high demand. Homes smaller than 1200 square feet appreciated an average of 7.5% per year for the past five years. Larger homes, above 2400 square feet, rose an average of 3.8%.
- Bedrooms – Two bedrooms appreciate 6.6%, while five bedrooms appreciate just 4.3%
- Floor plan – Open floor plans appreciate 7.4% per year, surpassing features like hardwood floors (5.7%), fireplaces (5.3%) and finished basements (4.6%)
- Style – Modern and contemporary architectural styles are appreciating 7.7% per year. Bungalows and traditional homes appreciated at 6.5% and 5.6% respectively.
- Adjacency – Homes with parks next door or nearby appreciate at 7.9% a year, hold value longer, and recover quickly from a downturn. Homes with mountain views appreciated 5.1% per year, while lake homes appreciated at 4.9% annually.
Putting all these factors together to determine how you can make your best investment, when purchasing a new home, can be very complicated. For an accurate assessment, ask your Realtor!
Centennial Escrow Team