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
Financial intermediaries who invest in deeds of trust and mortgages, and hold them in their own portfolio. Large financial firm that uses depositors' money to lend to borrowers. ...
Bond whose interest is free of federal, state, or local tax in the state of the issuer. It is typically a municipal bond of estate or county agency. For example, a New York City resident ...
Legal order for a person to present at a deposition or trial documents in his possession, such as related to a real estate transaction. ...
Note having more than one maker, if one or more of the makers default on the note, all makers are sued jointly, rather than just one or all, to make restitution ...
All of the conditions of the purchase and sale agreement have been fulfilled. The escrow agent prepares a written summary of the funds received in escrow, and the moneys paid out. The agent ...
A column designed to support a concentrated load. A pier column is made out of steel, steel reinforced concrete or wood. A structure extending out into the water supported by numerous ...
Extent to which soil has cavities or pores, thereby allowing water to pass through. soil productivity;Ability of the soil to accomplish the desired objective such as its capacity for ...
Compared to; relative to; against. ...
While trying to determine your net income, you might come across the term revenue, sales, or gross income. So what does revenue mean? Through revenue, we understand the income generated ...
Have a question or comment?
We're here to help.