The overall value of real estate is based, in part, on a number of unique aspects, each of which contributes to the whole, and they all interact with one another. There are two main categories that may be applied to qualities; these are the economic and physical categories. The aspects of real estate that will be covered in this article differentiate it from other items available on the market and transform it into a commodity that can be bought and sold.
Worth Of a Property
A property’s worth may be affected by a variety of economic factors, such as
- its scarcity,
- the quality of its upgrades,
- the length of time it has been on the market,
- and the level of demand for a particular location.
The proverb “They aren’t making any more,” which may be found in many different cultures, is a good illustration of scarcity since it provides a clear example of the concept. There is a limit on the amount of land that can be generated, and it will never be feasible to increase that number over where it is now at.
The Quality of Its Upgrades
There is a chance that improvements that are made to a single parcel of land, such as the construction of buildings, will have an influence not only on the value of the parcels of property that are directly next to it, but also on the value of the entire town as a whole.
If a large company decides to construct in an area that has been experiencing economic difficulties, the value of real estate in that area will most likely increase as a consequence of the entrance of new workers and as a consequence of the construction project. This is because the construction project will result in the creation of new jobs. This value would have an effect on the communities that are situated in close vicinity, so contributing, at least in some sense, to an increase in the value of the real estate in these regions.
The Length of Time It Has Been on The Market
There is a link that can be seen between the infrastructure and the concept of a permanent state. The infrastructure, which may include sewage systems, drainage systems, electrical systems, and water systems, is not in any manner harmed in any way by the destruction of buildings, dwellings, or other structures. This is the case whether the infrastructure is public or private. Not only does permanence have an impact on the kind of physical infrastructure, but it also has an influence on real estate.
If you purchase a piece of property in an area that does not have any utilities, drainage, or paved roadways, the value of that parcel of land will most likely be lower than the value of a piece of property that already has all of this infrastructure constructed and is in good condition. This is because the value of the property in the area that does not have any utilities, drainage, or paved roadways is much more difficult to determine.
The Level of Demand for A Particular Location
The fact that a piece of real estate is situated in a desired neighborhood is the primary element that is taken into account when determining its value on the open market. The placement of a property in an area that is not attractive for whatever reason is what causes the value of the home to decrease. This may happen for a number of different reasons.
The value of a neighborhood in the middle of Long Island that has starter homes that are 1200 square feet in size and are located next to a garbage dump is going to be significantly lower than the value of a neighborhood in East Hampton on the coast of Long Island that has starter homes that are 8000 square feet in size and were just built.
It is essential to keep in mind that a piece of land may be broken up into many smaller portions in order to make different lots, and this is something you should always keep in mind. If, for example, a big tract of land consisting of 20 acres is split into individual lots, then over time, each lot will ultimately evolve into its own separate and distinct piece of property.
Real estate is defined by its scarcity, improvements made to the land, permanence, area preference, non-homogeneity, indestructibility, and immobility. These are the key features that define real estate. One cannot exaggerate the significance of emphasizing the point that land and real estate are in no way equivalent notions.
What we mean when we talk about “land” refers to the surface of the earth, as well as the subsurface and the air that is above it. All of these elements come together to form the land. The phrase “real estate” refers to something that is physically rooted to a particular plot of land in a way that cannot be removed.
When searching for opportunities to make investments, it is vital to take into consideration the infrastructure of the region, the neighborhood that surrounds the property, and the preferences of the people in the area; in other words, location, location, location!
The website Square Footage Calculator provides free calculator for first-time real estate investors to figure out the actual square footage of the area before making a purchase.