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
(1) Temporary and symbolic payment showing good faith and obligating two or more individuals until a final transaction takes place. The binder is typically returned if the final agreement ...
Direct line of descent as from father to son. An example of a lineal hereditament would be passing of the title of real property by virtue of a will to the first-born son. ...
Any of a number of types of covenants agreeing to do or not to do something that is attached to the title and is passed form one owner to the next. See also covenant running with the land. ...
Unable to sell an investment to obtain cash in the short-term without incurring A significant loss. Real Estate is typically not liquid because of the inability to sell property to raise ...
Opening in the wall of a structure to let in air and light. ...
Span of time a rental agreement is free to the occupant. A landlord may offer this as an incentive to stimulate rentals. For example, an owner of an office building may provide a free ...
Costs taken over an above what one is entitled to. This can occur either by claiming depreciation costs exceeding actual depreciable value or by depreciating items that cannot be ...
Charge by the lender to keep credit available to the potential borrower. Once the loan is made, interest is charged on the amount borrowed. Real estate businesses often need money available ...
Local government ordinances governing real estate development including structural and design aspects. Zoning ordinances usually define various usage classifications ranging from ...
Have a question or comment?
We're here to help.