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
Funds of property bestowed upon a person or an institution. The income is used to serve a specific purpose for which the endowment was intended. ...
Holding and controlling property. It includes not only custody but also having some legal right. An example is occupying real property and enjoying its benefits. ...
Transfer of real estate from one taxpayer to another that are exempt from federal income taxes. An example is an exchange of property in which ownership of transferred real estate is still ...
Interest is due on a loan only if a particular circumstance occurs. ...
Uniform charge for transportation and delivery of household items to a homeowner within a particular locality. ...
Costs incurred in connection with real property that increase its cost basis or worth, such as a new roof, an additional room, or paneling a room. ...
A right or interest in property held by a third party, which often limits the use and diminishes the value of the property, but usually does not prevent the transferring of title. The more ...
A judicially approved plan in which a persons obligations are paid over three years. It is an arrangement for the repayment of debts which permits a credit user in severe financial straits ...
A two-story house characterized by a balcony spanning the width of the second story. Monterey architecture was adopted from the early California Spanish period. ...
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