While a majority of people look to buy one or more properties at some point, it is usually the case that we all have different reasons for doing it. Quite often it can depend on where we are in our lives, as young families look for a larger home to accommodate their expanding numbers while older generations choose to downsize after their children have flown the nest. Alternatively, you could be simply looking to use a bit of real estate as an investment or are just keen to finally find your forever home, the perfect pad for you to retire.
Interestingly, research has suggested that younger generations are less inclined to believe in the latter concept, with 58 percent of prospective millennial homebuyers polled in a survey by homebuilder Taylor Morrison referring to the idea as out-dated. A third admitted that they only actually expect to live in the next home they buy for less than 10 years, with 54 percent adding that their first purchase will be a starter home. Whatever your view on that, there is one key issue that this attitude raises, specifically that such generations are likely to put a great emphasis on the price of their property and the potential for it to rise and fall during their time in it.
According to the latest data from the Federal Housing Finance Agency, a 0.5 percent increase was seen in US house prices in October from the previous month. From a year-on-year perspective, the increase equated to a 6.6 percent rise. But just what are the issues that can affect house prices and ultimately have an impact on their likelihood to rise and fall? And is there anything you should consider when buying real estate that would put you in a prime position to enjoy a price increase?
Understandably, there are a whole host of factors that can play a part. For example, a Reuters poll last year highlighted how a 10 percent increase in US house prices had been predicted by market analysts, with factors behind the estimate including expected low interest rates and growth in demand. There are of course other issues, which can affect individual homes, from their general condition to any refurbishments you have undertaken that could bump up the value. However, there is a very strong argument to say that the most critical factor of all behind a property’s price is its location, not just in terms of the area where it resides but also of the various amenities, which are close to it.
According to Zillow, the key issues which lead homebuyers to choose a home are both affordability and the location of the property in a safe neighbourhood, with younger generations regarding the latter as even more important than being close to friends and family. So how can location and the changes an area undergoes affect the price of your property?
Olympics: The Power of Redevelopment
For a great example of this very issue, we should cross the Atlantic to London. The city did an excellent job of hosting the 2012 Olympics, and did its nation proud. However, the country was not the only winner, as the area of Stratford, which was the home of the Queen Elizabeth Olympic Park, also benefitting significantly. According to London’s Evening Standard newspaper, research has shown that the redevelopment and investment in the area generated by the Olympic Games has seen prices in Stratford rise by around 70 percent since 2005, with the area massively outperforming price increases across the rest of the English capital.
There is more to the area than just the Olympic Park though, as it is also home to the massive Westfield Stratford City shopping mall, which features a range of amenities including the Aspers Casino Westfield. The latter itself is a major attraction in the area as, in addition to offering the public a range of gaming action including variations of poker including stud poker, Omaha and Texas hold ‘em, it even hosts major live poker events too. For example, the 888Live London Festival was held last October and saw top UK poker player Tom Hall win the main competition. Events like this can not only attract publicity and attention, but can arguably also further drive up interest and highlight how Stratford is undoubtedly an area reborn. Even to people who don’t play poker, or choose to do so from their own homes, using poker websites to access more unusual variants and sit and go tournaments, the effect of major tournaments is experienced in the price of their houses, as it happened with the Olympics.
Broadband: A Need for Speed
While the wholesale redevelopment of an area is bound to have an impact on the performance of house prices, as we have already mentioned there are a host of other issues, which can also be a factor. Some may be major market-wide trends while others can be a touch more smaller scale. However, their importance can never be underestimated.
Take broadband for example. Access to the Internet has become such an integral part of our lives that a huge number of us would genuinely struggle to get by without it. However, being able to connect to it is not always a given. The speed of Internet connections can vary widely depending on a location and the technology which has been introduced in that area – and there is growing evidence that quality speeds could make a difference when it comes to the value of your home.
Two years ago, research by the Fiber to the Home Council Americas group suggested that high quality broadband in a neighbourhood could boost the value of a property by over three percent. The same study also revealed that sale prices for homes with 1 gbps broadband tended to be around seven percent higher than those that only had access to slower speeds such as 25 Mbps. The implication is pretty clear, if you are keen to ensure a new home has quality broadband expect to pay a little premium for it. Alternatively, if you are in an area that suffers in terms of speeds, it may be time to see what can be done to improve the infrastructure in the neighbourhood. Even those who aren’t interested in Internet speeds per se are affected by these changes in prices, because a high-tech neighbourhood is more desirable to most.
High Dining: Quality, Not Quantity
As we touched upon when discussing Stratford, access to amenities can be a major driver in terms of house price growth, often as they can have a significant impact on the quality of life available in a region. However, if research is to be believed, many people who are seeking a new home are not just concerned by the number of facilities close to a prospective property, but also their quality.
According to Forbes, the growth of the Internet has led to a sea change on this issue. While buyers previously had to rely on word of mouth to get a feel for how good local cafes, parks or restaurants may be, the web now means people can use a range of sites to check the ratings of amenities. Furthermore, the news provider added that research had even shown that having several highly rated restaurants within a mile of a property can lead to more than 11 percent increase in its price.
All of the above highlights how location and availability of entertainment and amenities in a specific area can have a huge impact on the level of real estate prices. From broadband, quality to local restaurants, all kinds of new factors and traditional issues can play a role in your property short and long term values.