Your home is one of the most important assets you own, which is why it is crucial to take care of your home in order to avoid watching the value of your home depreciate over time.
What is Home Depreciation?
Home depreciation is a term that businesses, government agencies, investors and others use to value most tangible items a person can own. This includes cars, electronics, furniture and homes. Depreciation is the dollar amount that an item’s value is reduced by annually. Cars depreciate in value the moment they are driven off the lot; homes depreciate over time, and typically follow trends in the real estate industry.
If you are someone looking to sell your home, or have plans of selling it in the future, home depreciation is something you want to avoid as much as possible.
What Makes a Home Depreciate?
The first thing you need to know when it comes to the depreciation of a home, is that the real estate market is hard to predict, and knowing what is going to be in demand five or ten years down the road can be difficult. With that being said, one of the most valuable parts of your home is not even the house itself; it’s the land. Houses can be remodeled, revamped, even knocked down and built back up; however, land can only be changed so much.
The things that really contribute to the depreciation of a home include the shape the house is in, the community in which the house is located, the risk of natural disaster involved in owning that home, as well as the stability of the economy during the time that the home is being assessed.
How Can You Avoid Home Depreciation?
A home is an investment, which means that expectations are that the home will grow in value over time, not depreciate. Unfortunately, homes don’t work like other investments, where you can put in the money and then the work is done for you. When you invest in a home, you are also commiting time. This time is necessary to maintain the home, make any necessary updates and renovations, and to ensure that when the time comes to sell your home that you don’t wind up losing money.
There are some things you can do to avoid home depreciation, and then there are factors that are not in your control. Although you can’t control the economy or the real estate market, you can make sure that your home is well kept, well located and regularly inspected by professionals.
Buying a home in an up-and-coming neighborhood may seem like a good investment, but who knows what the neighborhood will be like in ten years? Don’t risk your hard earned money by investing in property located in a place with a previously shabby or unstable reputation.
Stay on top of trends in home styles and designs so that you can do any necessary renovations or upgrades that current buyers would be looking for, and always make sure that you have a professional come and inspect the home on a regular basis.
Remember that your home is not the only contributing factor to the overall value. The land is a huge way to influence whether the property value appreciates or depreciates. Keep your lawn neat, landscape regularly, and make sure that the outside of the home matches the inside.
By doing these things, you can avoid the devastating news that your home is the victim of depreciation.