Archive for October, 2006

What gives a home its Value?

Thursday, October 5th, 2006

Many people look at today’s home prices and wonder how it is possible for them to be as high as they are.  As a REALTORÒ who studied economics, even I find it hard to believe that prices have risen as much as they have over the last 7 years.  However, if you take a moment to think about the factors which influence price, it is apparent that housing prices are where they should be. 
            There are many factors that influence the value of a property.  In a general way, the most important of these factors are location and local market conditions.  First and foremost, it is local market conditions that establish prices in an area.  The most basic influencers of San Diego Real Estate market conditions are supply and demand.            

            Logically a short supply of homes and a high demand for homes must cause home prices to rise.   Location is one thing that can readily affect the demand to live in an area.  Anyone who has been to San Diego can understand why someone would want to live here.  Great weather, the ocean, a strong economy, and access to almost any kind of recreation a person might want.  In San Diego, the demand for homes is not being satisfied on a yearly basis, causing a buildup of demand that is growing every year.  Additionally, because of political and geographical restrictions the growth of the supply of San Diego Homes is being stifled.  High demand + Limited Supply = High prices that are heading higher!