Beyond Real Estate: Outside Factors Impacting Your Home’s Value

When you’re buying or selling a home, two of the first investment-related questions you have are probably: 1) What is a fair market price for the home? and 2) What will the market price of the home be in the future?

To try and answer these questions, you should most definitely look at current and historical real estate trends. However, you should also examine other outside factors that could indirectly yet significantly impact your home’s value. Three such factors to consider include:

Labor market trends. The labor market and real estate markets are closely associated, with an increase in one market often correlated with an increase in the other. For example, an increase in unemployment in your city due to layoffs or closures from a major area employer could result in the loss of local jobs — and therefore a decrease in demand for homes. As a result, the market value of your home may drop. On the flipside, an increase in wages or employment could increase the local market value of your home as the overall economy of your area improves.

Government policies. Tax credits, deductions, and subsidies can all impact the supply and demand of real estate, therefore influencing the market value of your home. For example, the US Government boosted the demand for home purchases during the recent recession by introducing a first-time homebuyer credit which helped 1.8 million people buy homes in its first year. This policy increased the demand for homes, which in many cases increased or maintained the value of homes in neighborhoods that transformed into “seller’s markets.” Alternatively, government actions like increasing the Federal Reserve’s interest rates can reduce the availability of cash on the market and make it more difficult for buyers to secure a loan. In this scenario, demand for houses may decrease — possibly lowering the value of your property. 

Population shifts. Changes in the population of your area — combined with the availability of property — can impact the value of your home. If you live in a crowded urban city and witness an increase in the amount of people moving to your area, you could be fairly confident that this increase in demand for housing would increase the market value of your home. If you live in a suburban area with plenty of open land and houses available, then the value of your home may or may not increase as more people move to your area. On the other hand, a decline in your local population could decrease the value of your home, as recent studies show.

Of course, there’s no true way to predict the future — but staying aware of trends can definitely help you feel more prepared for the future. Wondering if now is the right time to buy or sell? Contact an Origin mortgage team member and we can help.