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
individual who purchases property for another for the purpose of not identifying to the seller and other interested parties the real identity of the true acquirer. The individual who makes ...
An deir to an individual who died intestate and is entitled, under the distribution statute, to a portion of its proceeds. After all claims against the estate are satisfied, the ...
Fence constructed at the property line or other division point separating a subdivision or a home site. It marks the point of separation between two separate properties. ...
Rate of return of capital invested in building improvements. Is segregated from land investments and provides a method of separating property income streams between improvement and land ...
Fee charged by a public registry for the administrative costs of recording an instrument. For example, a municipal registry charges $30 to record a property mortgage. ...
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 ...
Provision in a mortgage permitting the owner of property to transfer the mortgage to a buyer. ...
The seller disclosure is a statement made in good faith regarding the condition of the home he/she is trying to sell. There is a seller disclosure form – called “Form 17” ...
Registered real estate broker who charge a flat fee, rather than a commission, for real estate purchase and sale transactions regardless of the property's sale price. No fee is charge if ...
Have a question or comment?
We're here to help.