Property Appreciation
Appreciation, or property appreciation in real estate is the increase in the value of a property or asset over time. This increase in value can be due to a number of factors; inflation, population growth, economic growth of an area, etc. Property appreciation can occur under a variety of different circumstances and with virtually any piece of real estate. Appreciation is the opposite of depreciation. Let’s explore some examples of appreciation in real estate.
Examples of property appreciation in real estate
Joan is a young woman in her early 30’s. After finishing a masters degree in finance, Joan finds an excellent job with a good salary at a stock brokerage company. As she nears her mid thirties, her house is paid off and she has saved up a tidy sum of money. With her savings, Joan invests in a cozy little bungalow in the suburbs, spending a reasonable sum of $125,000.
After finding a tenant and contracting a property management service, Joan begins to reap the rewards of her investment. However, after a few years of being a landlady, Joan tires of the responsibility and stress of maintaining the property, and decides to sell. After contacting a real estate agent and finding a buyer, Joan manages to get $225,000, making a tidy profit of $100,000.
The cause for this higher price is what is known as property appreciation. During the time that Joan had owned the house, a mall had been built nearby, a new movie theatre opened and an office complex newly constructed. The resulting demand for housing caused the value of Joan’s house to go up, without her even having to do anything.
Popular Real Estate Terms
Typically, the term rider defines a financial concept, implying a written modification applied to an insurance policy, altering its initial clauses and provisions. The rider can update the ...
Degree of completion or accomplishment such as a home that is 70% completed. Condition of real property. Position of an item. Legal standing such as of a case. ...
A contract not in writing. Oral contracts are legally enforceable except for those applicable to the sale of real estate. ...
Estimated market price property could bring using currently accepted appraisal methods. This might not be the same as the market price at any one given time when the seller is compelled to ...
Private company established in 1957 and headquartered in Milwaukee, WI, providing private mortgage insurance (PMI) to mortgage lenders granting mortgages to mortgagors not having at least a ...
Provision in an agreement in which its renewal is a matter of course at the end of its initial term. ...
Low level of land positioned between mountains or hills. ...
Right to substantive real or personal property having tangible body and form. For example, a corporeal right to a house, property, furniture, or fixtures. ...
Payment made by the tenant to the landlord for the right to use property, such as an apartment or office. ...
Have a question or comment?
We're here to help.