What Makes Real Estate Valuable?

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Like most other people, I would like to own my own house someday. But I also know that investing in real estate can be a scary business. My family had it really tough during the housing crisis back in the 2000s, and I don’t want to end up under serious financial strain like that. But I don’t really know how housing values work or what causes them to fluctuate so much, so I’m apprehensive about ever buying a home. Experts, what can you tell me about what makes real estate valuable?


A lot goes into the value of a piece of real estate. And while the real estate market is not entirely unpredictable, it certainly is capable of surprises at all different scales. This can have serious consequences for both real estate investors and homeowners.


And it’s important to note, of course, that those two groups are different. Real estate can be an investment in much the same way that stocks and bonds can be: bought and sold for profit by wealthy investors. But homeowners should not necessarily view their home in this way, because real estate advantage has some pretty serious structural disadvantages for more casual investors. The most obvious problem is real estate’s illiquidity: it’s not easy to just sell your house and move!


That doesn’t mean that you shouldn’t be mindful of your real estate purchase’s value, of course, and it doesn’t mean that you can’t hope for you home to grow in value. But experts suggest that homebuyers should consider their homes more “assets” than “investments”–your home is valuable, and should be carefully cared for, but it is not a get-rich-quick scheme!


With all of that said, let’s examine a few ways to ensure that you get the best value for your money when home buying.


Your home’s value starts with location. Safety, proximity to workplaces and attractions, and space all matter quite a bit, experts tell us. Access to superior schools will be a huge concern for parents, say Wyoming, Michigan school managers. For clues about all of these factors, pros recommend looking at demographic information about your area. Are there a lot of young couples and parents in your region? Or is the population aging, which might suggest trouble for future school budget votes?


Real estate gurus are fond of saying “location, location, location,” but it’s not quite true that location is everything. The structure matters too, of course, and a sturdily-built home with timeless appeal is going to appreciate better than an out-of-style fixer-upper, assert Northville, Michigan home builders.


Taking all of the above into account, you can hope that your property will appreciate in value. But the most important thing about buying a home is to manage your spending properly. Don’t reach beyond your means; set yourself up in such a way as to be able to weather the possibility that your home does not appreciate in value. Remember, as a typical homeowner, you’re looking for a place to live, not a way to get rich overnight.


“He is happiest, be he king or peasant, who finds peace in his home.” — Johann Wolfgang von Goethe