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
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Net amount received when property is sold. It equals the selling price less outstanding mortgage balance less all costs incurred in connection with the sale. These expenditures include ...
The right to possess, exclusively occupy, enjoy, control, and dispose of real estate. Ownership rights to realty are granted by the ownership of a title to real property. ...
Tax imposed by some state and local governments to record into the public record property deeds and mortgages. ...
To clip or prune shrubbery,etc. ...
An estate constrained from some heirs and dedicated to others on the basis of a certain condition. ...
Schedule which is part of Form 1040 showing income or loss from real estate transactions including net rental income (rental revenue less rental expenses). ...
Dividing a lot into two or more parcels. Normally a variance would have to be obtained to permit a lot split. The lot cannot be split unless they meet minimum area zoning requirements ...
Individual engaged in selling a product or service. The product may be an investment in real estate. In some instances, state law may require licensing to safeguard the public by requiring ...
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