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
Drain facility usually underground for waste and water disposal consisting on connected pipes. ...
Millennials – also known as Generation Y, because they come after the so-called Generation X - is a term coined for a generational extract of people born at the end of the first ...
Rate of return that is necessary to maintain market value of a real estate project. The cost of capital is used for project evaluation purposes. Under the net present value method, the cost ...
Adding a period of time onto another. An examples a mortgagor who successfully restructures his loan by tacking another five years onto the term. ...
A hard white finishing cement with a fast setting time and a high polish capability. Consisting of anhydrous gypsum plaster and an accelerant, alum, Keene's cement is normally applied over ...
Insurance contract providing coverage for risks primarily associated with negligence and acts of omission associated with third-party injuries or property losses. Property and casualty ...
Construction materials from stone, brick, and concrete block. Masonry materials play an important role in providing structural support as well as being used as decorative finish surfaces. ...
Water/plaster mix used as a surface for walls and ceilings. ...
People often ask themselves, what does interim mean? By definition, interim means a break or pause in a particular activity. As an adjective, interim means a temporary, provisional, or ...
Have a question or comment?
We're here to help.