I was at Running Fit in downtown Traverse City last week checking out a new pair of running shoes, and when the sales associate helping me asked what size my foot was, I responded, almost instinctively with “11.5”, the same size my foot has been since I was a teenager.
However, when I wandered into the clothing section to check out some new running shorts, I paused, realizing that I was unsure of my current waist size; a phenomenon that many of us are experiencing as we emerge from our comfort-food fueled COVID hibernation.
At that moment, I was struck by the fact that a lot of property owners wrongly think about their home’s valuation like their shoe-size (static, rarely changing) when they should be thinking about it more like their waistline (always on the move). Here are some reasons why:
Your Home’s Location Doesn’t Change, But Demand For an Area Will
It’s easy to think that since your home’s location isn’t going to change that the value of a particular spot will remain static from the time you buy, but that simply isn’t the case.
Take the Old Mission Peninsula, for example. 40 years ago, you could buy a home on East Bay with direct waterfront access and a private beach for less than $200,000, these are the same homes / lots that are selling north of a million dollars today.
Why this crazy jump? In addition to the overall market maturation and the continued growth of home prices across the board, this area has moved from being a spot where farmers and migrant families lived, to sought-after wine country and a vacation home mecca. In short, demand for the amenities offered by the Old Mission Peninsula out-paced the growth of the market as a whole, making homes here more valuable than ever.
What is in Style Today Might Not be in Style Tomorrow
Remember when you couldn’t throw a digital rock on the internet without hitting some real estate marketing toting a home’s “open floor plan”? We do too, in fact, we probably wrote a bunch of it. There’s definitely still buyer interest in open floor plan homes, but in a post-COVID age where many of us are still (maybe permanently?) working from home, the need for dedicated space has exploded.
All of a sudden, homes with an office, a bonus space above the garage, even traditional bungalows with smaller bedrooms and divided floor plans are feeling more valuable and buyers are more likely to offer on them.
The bottom line is, what is popular today might not be popular tomorrow, so a home’s value in a buyer’s eyes is going to change accordingly.
Sweat Equity is Worth More Than You Think
A lot of homeowners understand that hiring a crew to put in a brand new kitchen is going to add value to their property, but what about the hard work you do yourself? When you don’t have receipts to back up the amount of money spent upgrading a space, it’s easy to think that the projects you’re doing around your home don’t add up to extra value other than the value of an improved quality of life for you and your family, but this simply isn’t the case.
Consider the family that, over the course of 10 years, landscapes, creates gardens, installs a deck with a hot tub, and generally turns their backyard from a blank slate to a functional, desirable, outdoor space.
Since most of the resources necessary to make this happen involve sweat and time, it’s tough to put a value on it, but that value exists, so homeowners who’ve been working actively to maintain and improve their homes through ownership are often sitting on more value than they realize.
Major World Events Will Affect Your Value Positively or Negatively
I included the fact that major world events could shift your home’s value up, theoretically, but realistically, your home’s value is likely only to go down in the wake of significant happenings here or abroad.
Consider the housing crisis of 2008: Did you know that, on average, relatively few homeowners in Northern Michigan were direct parties to the bad mortgages that precipitated the major market correction? It’s true, less than 10% of mortgages in our area were actually considered bad loans.
Yet, the value of real estate in our community as a whole was drastically affected, and those of us in the real estate industry were all holding our breath as to what was going to happen next.
What Does This Mean For Homeowners in Northern Michigan?
It means that your home value isn’t something you get once and then can just count on remaining from that point forward. Your home’s projected market price changes regularly, and the opportunities that equity in your home can unlock change regularly too.
If you’ve been considering the idea of selling your home, we here at Brick & Corbett suggest getting a professional home valuation from a qualified local real estate professional at least once per year, as well as an estimate of projected time-on-market so you can plan accordingly.
If you’re not considering a sale at this time, we still think you should get a personalized home valuation at least every two years so you can accurately estimate the amount of equity in your property, which will unlock things like home equity loans, refinancing options, or even dropping your PMI payments.
Bringing it All Together
Your shoe size is like your address. Barring a major event in your life, that’s likely not going to change too often.
Your home’s value, that’s more like your waistline; expanding or contracting depending on the levels of activity (in the market) and what’s on the table (competition & demand).
Your home’s value isn’t a set-it-and-forget-it number, it is constantly changing. Part of being a responsible homeowner is monitoring the health of your investment. If you want help understanding the value of your property, Brick & Corbett is here to help.
Visit our home valuation request page and a member of our team will get back to you quickly with what they need to get started creating a personalized, expert report of your home’s market value, all free of charge or obligation.