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R

eal estate has an aura about it that tends to make people feel that it will rise in value forever. As a Realtor, I am the last one to disabuse anyone of that notion, but, at the same time, a proper understanding of why property appreciated helps in making decisions about how to acquire and care for a country home.

The cost of property rises as the purchasing power of the dollar diminishes. We have experienced inflation for most of the last fifty years, but we must imagine that a prolonged period of deflation would cause real estate to lose value as the purchasing power of the dollar rises. Let us assume a steady inflation rate as a constant and not concern ourselves with this aspect for now, because there is little an individual can do to change the course of the overall economy.

Real estate also fluctuates in value with the fluctuating popularity and desirability of the neighbourhood. As a neighbourhood becomes more popular, naturally people are willing to pay more, and the prices go up. Whereas the first aspect of appreciation is mostly influenced by the overall economy, the second is more influenced by fads and fears. One neighbourhood may slowly gain in popularity for years, and then, as its demographics change, it may quite rapidly soar or tumble.

We feel that a real estate agency has a responsibility to be conscious of what the trends are in the neighbourhoods it serves and to keep in touch with the community whether or not any particular house is for sale. As Realtors, the first issue of concern to us when we meet a purchaser is his or her choice of neighbourhood. We break our whole region into neighbourhoods and discuss the relative merits of each one with the purchaser before we discuss any individual property. Different neighbourhoods necessarily appeal to people with different needs and desires, and a purchaser will pay a higher price or purchase with more conviction if satisfied that the neighbourhood is where he or she really wants to be. A condo project is a neighbourhood within a neighbourhood and the popularity, demographics and so on of the individual condo project will have a huge influence on its value.

In order to determine the value of your property, if you start by appraising the neighbourhood, you will find that it offers some excellent guidelines. Is the neighbourhood desirable? Are new buyers demographically consistent with the current population? Can you find out which houses recently sold and for what amount? Does the neighbourhood have an identity? Sometimes neighbourhoods have nothing more in common than where they pay their taxes. Around lakes, the neighbourhood will often have formed a lake association. Through this association, it develops a sense of community. It can plan activities, express concerns and in the process define the values and priorities of its members. Such a community is likely to be dominated by one demographic group. Are new buyers of that same group? Usually they will be, but when they aren't, it could mean that the community is on the verge of major changes. Sometimes the new group will not participate in the association, or at least not in the same way as those long established. The new group may be wealthier or less wealthy than the old. The quality and extent of renovations that the new group does will tell you the answer. If serious extensive renovations are going on, it is likely that the whole neighbourhood will rise in value. If the new group is neither renovating nor participating in the association, chances are that values will drop.

Once you have determined the vitality and the average value of your community, you will be able to examine your property in light of this information. Remember that your property is not likely to vary hugely from the value of the median property, and if it does then it might mean that either way too much or way too little has been invested in its construction or upkeep. The general tendency of values in any neighbourhood is towards the median, pulling the more expensive homes down and the less expensive ones up. Your house usually ends up being worth closer to that median amount than you might have thought, no matter its own individual characteristics.

Good neighbours and responsible members of a community bring the worth of the whole neighbourhood up. Being conscious of the community or helping out with the lake association will positively influence the value of the property in it to everyone's benefit. The people, and therefore the spirit, of the community will always have more influence on values than any particular aspect of any individual property.

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