Home Price Estimate for House Construction in Houston
Developing a home price estimate for Houston new house construction and establishing a Houston home estimated value for existing house use many of the same tools and resources.
For new house construction, developing a home price estimate is useful
for many reasons before, during and after the owner builds a house with
the Houston construction company.
First a home price estimate is needed as a construction budget to
share with the home designer. This helps the home designer to create an
architectural design within the financial resources of the owner.
Secondly, the home price estimate is used to establish short term
construction financing and to qualify for a mortgage amount.
By establishing a home price estimate for house construction, the house
building contractor can also use it as accost control tool through the house
building process.
Developing a home estimated value for house construction consist of
part science, part history, comparable house prices and current market economic
conditions.
The primary difference between establishing a home price estimate and
establishing a resale home estimated value is that new house construction is
often a one-of-a-kind event and there may not be a price comparable that falls
inside the guidelines of appraisals.
House prices have continued to climb since the financial and banking
crisis of 2008. Buyers and sellers’ confidence has continually gained momentum
as a result of a strong economy and record low unemployment rates.
The prices of Houston homes are a combination of existing
house values, economic conditions effecting supply & demand and the
neighborhood locations.
Any and all of these factors will have some measured effect on the
immediate house price.
There are other factors that influence house values other than the
major fore-mentioned factors.
The condition of the house, like the amount of deferred house
maintenance, the vintage of the house and architectural style will have a
substantial influence on the home’s value.
Other elements such as product design updates, the age of key
replacement products like roofs & air conditioning units will also dictate
the ultimate house price.
Determining a home’s value is part science, part observation and a
great deal of research.
One of the more interesting phenomena associated with this topic is
that house prices are not always consistent with house values.
As we have noted there are many contributing factors to these
occurrences. One of the most difficult factors to predict and plan for when
preparing to price and sell your property is the fickle nature of buyers.
This characteristic even challenges the most seasoned real estate
sales professionals.
So, we will focus this article on the major features that contribute
to home values and home
prices for both sellers and buyers.
The major factors are that have a substantial influence on house
prices and ultimately house values are appraisal values, property tax
assessments and national economic conditions.
Appraisal
Values
The most traditional method of determining a home’s value is by means
of an appraisal.
This method is the real estate and banking communities most important
assessment tool in determining the home’s value.
Most real estate sales people use this to help owners decide their
homes sales price.
The appraisal value establishing process is
normally conducted by a certified real estate appraiser. They research
comparable properties that have sold in the past 6 months and use these to
establish a value benchmark.
These benchmarks are used to establish the fair market value of the
subject property. This process is not without its short comings, but remains
the primary resource for the residential industry.
Property
Tax Assessment
Another generally accepted method in establishing the fair market home
value is the use of the county’s property tax assessment value.
The county tax assessor researches hundreds of relevant factors in
calculating a home’s value to extensive to address in this article.
They use the general home’s condition, neighborhood sales prices and
land values to make their assessments.
The property tax assessing method is more effective in neighborhoods
and with homes that are uniformly consistent.
The more unique the dwellings features are the more ineffective the
tax assessment method is at establishing the fair market property value.
Another challenge with Houston tax assessment methods is the Texas
homestead tax law.
The Texas residence homestead exemption provides
some relief from real estate taxes through providing an exemption amount and a
maximum 10% cap amount allowed in increasing the annual tax assessment value.
The homestead exemption can skew the actual fair market value through
the assessment cap.
If an area of town goes through a sudden market value gain or loss,
using the property tax assessment value can be very misleading of the homes
real market value.
National
Economic Conditions
The national economy has a huge impact on a home’s market value.
National factors such as job growth, interest rates and tax laws can influence
the buyers and sellers purchasing motivations.
The national economy and outlook provide a general confidence for both
buyers and sellers when evaluating the best time to transact a property.
One of the reasons that during an economic recession residential real
estate activity decline is due to fear of the unknown.
Sellers worry about receiving the best possible house price and buyers
worry about too high of interest rates.
The national economy will always play a role in both the buyers and
sellers’ confidence.
Local
Economic Conditions
The local economy even has a greater influence on the confidence of
buyers and sellers then the national economy.
These factors include local employment, supply and demand of available
homes and local home prices.
These factors have a considerable effect on the local confidence of
house buyers and sellers.
The interesting thing about the differences between the local and
national economy factors are that the national economy can be in a troubled
state, while the local economy can be booming.
The opposite can also happen, leaving buyers and sellers with a high
level of uncertainty. The housing market is a cyclical industry and can be
difficult to anticipate the cycles.
This is one on the factors that make house buying and selling somewhat
speculative.
The lines between the local housing market and national market have
changed in the last decade. Single family homes have become an investment target for national and local
investors.
Although there has always been an attraction in rental homes, Wall
Street has found an appetite for bundling local and national homes in large
portfolios.
These means that local buyers are now not just competing with other
buyers but with investors as well.
New Home
Construction Prices
New home construction prices also have an effect on the local housing
market. The cost of a new built home sets the
upper benchmark for house values for that immediate area.
New constructed homes offer the newest in architectural design and
house product to buyers.
They also contribute toward maintaining a healthy level of replacement
housing inventory.
The cost of a new house compared to cost of remodeling will
always be a consideration in the property buying process.
As homes get older the cost of obsolete house product replacement
becomes an important part of maintaining and protecting your property
investment.
The cost of upgrading and house maintenance can be considerable and
should be evaluated against building a new house.
Neighborhood
Locations
The most impactful factor in home estimated value is the location of
the property. One can have an identical property 10 miles away and the location
of the house can affect the value of the property up to 50%.
This is due to land values, which in turn is a
result of demand and supply of certain locations.
Things like school districts, shopping & dining and life style
needs can be very appealing to the right buyer.
Understanding the factors that can shift house prices and home
estimated value in Houston provides both sellers and buyers in making the best
decision for their situation.
In today’s changing housing market buyers and sellers need to verify
the information they receive. Nothing is better to achieve this goal then
proper research.
Conclusion
Developing a Houston home estimated value for new house construction requires
the market knowledge of local resales, appraisals and comparable resale data to
properly establish the base price.
With the local knowledge and establishing the owner’s financial
resources the house designer can develop the architectural house design that
fits the new construction budget.
The home price estimate is an essential house building practice that provides guidance, a baseline budget estimate for the house design and obtaining financing.
Source: https://www.marwoodconstruction.com/home-price-estimate/
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