The Tiny house Blog

What Really Determines How Much Your Home Is Worth?

Updated on:
September 18, 2023
custom tiny home with black metal and wood siding

When considering what determines a home's value, there are many factors to consider. From location to condition, there are factors that will determine how much buyers are willing to pay. Whether you are looking to buy or sell a home, understanding these factors will help you make more informed decisions.

In this blog post, we will outline the 8 most important factors that influence your home’s value. 

The 8 Most Important Factors That Determine Home Value

A lot of things can set your home's value, the list is huge. At the end of the day, understanding the following factors is essential to making an informed decision about your home’s value.

1) Location

Since the location has a direct impact on their lifestyle and convenience, buyers tend to prioritize location when searching for a property. Proximity to amenities such as schools, shops, transport links, and recreational facilities can have a huge influence on how much someone is willing to pay for a property. 

The type of neighborhood the property is situated in can also affect its value. Your home's value will likely be higher if it is located in a premium community like Power Lake. Such a community has plenty of recreational options, like boat and yacht clubs. On top of that, the orientation of the property is very important. People tend to like south-facing houses more since they offer lots of natural light and breeze. 

2) Size

Of course, people will value your home according to its size. Usually, buyers are attracted to properties with ample square footage and rooms because they represent a more comfortable living space. Therefore, the larger the home, the higher its market value. 

Although the home's value can vary depending on the buyer’s preferences, the size of the home should not be overlooked when assessing its market value. When considering size, potential buyers will look at the overall square footage of the home. At the same time, they will notice any adjoined outdoor spaces like backyards and patios. 

Pro Tip -

When adding up a home’s total living area, don’t forget to include things like garages and unfinished basements. These areas can add significant value to the home.

3) Condition

Buyers will look for homes that are both structurally and aesthetically in good shape. Your home's value will dramatically increase if it is in excellent condition in terms of the roof, foundation, walls, flooring, wiring, plumbing, appliances, and so on. On the other hand, if your home needs extensive repairs or updating, it can be a significant turn-off for potential buyers.

As a result, you should take care of any repairs and update any dated features or finishes. Fresh paint, clean carpets, updated fixtures, and new appliances can boost your home's value. If you want to maximize your home’s value, make sure it is in the best condition.

4) Age

When it comes to determining the value of a home, age can play a significant role. Homes that are newer tend to be worth more, as they are often built with higher-end materials and updated features. Although age alone does not determine value, it should be taken into account when evaluating the general state of a home. 

In addition to that, the age of the home may impact the neighborhood as well. Newer homes in the area can raise the value of nearby properties. This will eventually drive up the overall value of the neighborhood. On the other hand, older properties may have lower values due to their age and lack of contemporary features.

5) Upgrades

When it comes to your home’s value, the quality and quantity of upgrades you make can have a major impact. It is crucial to remember that not all improvements will raise the value of your house. While upgrades can range from a long list, the study shows the following 3 ones have increased home value in real-time.

  • A Sophisticated Gas Fireplace - According to a survey by the National Association of Realtors — "A gas-burning fireplace was cited by 70% of real estate agents as having the greatest impact on property value."
  • Sliding Barn Doors - From a report by Zillow — "Homes with sliding barn doors often sold for 13.4% more than they were anticipated."
  • Use of Technology - From a particular report — "Using technology can increase the sale price of your property by as much as 5%."
info graphic says using techology can increase the sale price of your property by as much as 5 percent

Low-cost DIY projects like painting walls or installing new flooring can provide a good return on investment, while more expensive projects like adding a pool may not. Talk to a real estate professional to get an idea of which upgrades will benefit you most.

6) Rates of interest

Interest rates have a big influence on the value of homes, as they are related to the amount of money buyers are able to borrow from a bank. When interest rates are low, buyers can get better mortgage deals. Thus, it will increase the chances of buying a home. As a result, demand for homes increases, leading to an increase in their value. 

Conversely, when interest rates are high, buyers may not be able to afford large mortgages. Thus, demand for homes decreases, leading to lower values. When interest rates are volatile, they can create uncertainty in the market, making buyers less likely to purchase a home. Therefore, buyers and sellers should pay close attention to interest rates to better understand how they will affect the market value of a home.

7) Local Real Estate Market 

Local factors, such as the overall economic climate, nearby development projects, population growth, and job opportunities, can all affect home values. According to the Realtor website, 

  • The overall value of the neighborhood may decrease by 5.3% if there is a power plant nearby. 

Along with all these factors, the local real estate market plays a major part in determining the value of your home.

Additionally, properties that are in an area with similar home styles will fetch higher values. The health of the local economy, job market, and public school system can also influence property values. The Realtor website says, 

  • A bad school has the potential to decrease the neighborhood value by 22.2%. 

Buyers tend to prefer neighborhoods with amenities like parks, recreation centers, and safe streets. Pay attention to these factors when considering the value of your home.

8) Monetary indicators

Current state of the economy plays into your home price as well. The strength of the economy is a major factor that influences your home’s value. This is especially true in regard to the stock market and currency exchange rates. When investors are optimistic about the economy, they typically invest in real estate. Hence, this will result in increased values for homeowners. 

Similarly, when there is economic uncertainty, home values will likely decrease because fewer people are looking to move and there's less demand. Other factors such as inflation, unemployment, and overall economic performance also have a significant effect on home values. 

For example, during periods of low inflation, homeowners may be able to purchase homes at discounted prices. In times of high inflation, homes may become more expensive due to the increase in the costs of materials and labor. According to Zillow

  • In the United States, the value of a typical single-family home in the midrange price range has climbed by more than 90% in less than ten years.


Q: What are the three main types of valuation used to check a home's worth?

The three main types of valuation used to check a home's worth are comparable sales analysis, replacement cost analysis, and income analysis. Comparable sales analysis looks at the sale prices of similar homes in the area, while replacement cost analysis looks at how much it would cost to rebuild the home. Finally, income analysis looks at the potential rental income the property could generate.

Q: How often should I check my home’s value?

It is generally recommended that you check your home’s value every few years to get an accurate estimate. Keep in mind that the real estate market is constantly fluctuating. So, staying up-to-date on changes in the market and in your local area is always smart.

Q: How can I add value to my home?

There are many ways to add value to your home. Making simple changes like painting or refinishing the floors can help increase your home’s value. You can also add value to your home through curb appeal. This can be done by cleaning the landscape, planting some flowers, and adding a fresh coat of paint to the home’s exterior.

Your home’s value is ultimately determined by what a buyer is willing to pay for it. All the factors mentioned above can influence its value. Knowing these factors can help you determine a realistic asking price or what kind of offer you should make when buying a home.

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