Factors That Determine House Prices

Answer 1

Have you ever wondered what determines the price of a house? Why is it that a 2,000 square foot house in a rural area could go for $85,000 while a 2,000 square foot house in Boston could go for several times that amount? Here are some reasons as to why that is.

Location Is Everything

The key factor in determining your house price is where the house is located. A house located in a rural area won't go for as much because it isn't in an attractive area. The only exception to that rule is if the land surrounding the home is used as a farm or has an attractive asset such as oil or precious metals located on it. However, a house or condo in the city will fetch a large sum because it is in an attractive area.

Housing Prices Go Up When Land Is Scarce

Another factor that determines the price of a house is the availability of land. Regardless of where you live, you need a place to live. If there are fewer places to build housing of some sort, there will be fewer options for buyers. The high demand coupled with the low supply will result in higher home prices.

What Features Are Included With The Home?

A home that has few bedrooms, a small kitchen and an outdated bathroom is not going to have a hefty price tag attached to it. However, a house with 10 bedrooms, an updated kitchen and a bathroom with a new shower in it will fetch a large sum of money. This is why fixer-upper type homes are attractive to home buyers. They can purchase a house for less than market value, put in new appliances and then sell it for much more in a few years.

Home values are dependent on many things. Scarcity of land, new features and the attractiveness of a location all factor into the price of a home. Therefore, these are the things that home buyers need to look for when purchasing their next home.