One of the primary reasons real estate is considered such a great investment is its rate of appreciation. Today, the national average for appreciation has risen to just over 14.5% year over year of 2% per month. However, while most homes’ values will only go up, certain things can drive down a property’s value. Armand Candea, co-owner of the Chicago-based property development company Candea Development, has worked within real-estate development for the better part of 15 years and understands the nuances of property value. In order to better help first-time homeowners and aspiring property developers, Armand Candea of Candea Development will share within this blog the biggest factors that drive down a property’s value.
Poor Exterior Paint Quality
For all Candea Development properties, Armand Candea and the Candeateam ensure that only high-quality exterior paint is used for the home’s façade. This is largely due to the fact that a home’s exterior condition greatly impacts its value. A home that has a faded, cracked, or peeling exterior can drive a home’s value down significantly. In addition to port quality paint, the color of paint can also impact a home’s value. For this reason, homeowners should consider painting their home neutral colors such as beige, white, or gray before putting their home on the market.
Proximity to Certain Facilities and Businesses
Before settling on a new location for a housing development project, Armand Candea and the Candea Development team will research the neighborhood and see if their potential location is close to any sites that may drive down the property’s value. Unfortunately, a home’s proximity to a number of locations can significantly drive down its value and reduce the chances of it being sold on the housing market. Some sites that are associated with major drops in property value include:
A Poor Scoring School (22.2 %)
Strip club (14.7 %)
Homeless shelter (12.7 %)
Cemetery (12.3 %)
Funeral home (6.5 %)
Power plant (5.3 %)
Shooting range (3.7 %)
Hospital (3.2 percent)
If a home forecloses close to your development property, it can hurt that property’s value. This is because home appraisers compare all selling prices within a neighborhood when estimating a single home’s value. Foreclosure homes can sit vacant for years without selling, driving down the price and the prices of homes in the surrounding neighborhood. For this reason, if more than one home forecloses in your neighborhood, it could significantly impact your development property’s selling price.