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
Generic name given for any association of property owners sharing an interest in commonly owned property. Community associations may be developed in condominium, cooperative, or housing ...
The land-to-building ratio is a means to calculate in percentage how much a structure occupies the total land parcel on which it is located. It is the total building area as a percentage of ...
Individual who gives false statements under oath, which is a criminal act punishable by imprisonment and fine. An example is signing a tax return that fraudently understates rental income, ...
Loan such as a mortgage that the borrower has consistently made payments on when due over many years. The borrower has proven his creditor worthiness. ...
Owned by one individual or sole ownership. ...
Affordability is a term used to describe the ability of a person or entity to pay in relation to the income earned by them. Affordability is the comparison of a person's income against ...
The word’s etymology reflects several diverse or seemingly unrelated topics under the same umbrella. As part of everyday discourse, you’ll find the term “omnibus” ...
To understand the definition of the term demised premises, one must understand what demise means. Because demised premises is a widespread use for the term demise. The demised premises ...
Amount the taxpayer gets back when he or she files the tax return at the end of the reporting year because taxes were overpaid for that year. The tax overpayment equals the tax payments ...
Have a question or comment?
We're here to help.