Real Estate Values

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Real estate values are normally mentioned as square foot prices. Both the mean and median price calculations are applied in real estate prices. The location of the property is classified as urban, suburban, and rural. In the United States, the house price index is the official measurement of housing prices. National Association of Realtors widely reports median home prices of various regions across the country.

Real Estate Pricing

The most common indicator in comparison of real estate prices across various areas, markets, and periods is the median housing prices. In the fourth quarter of 2005, the median house price was determined as $213,900 in the United States. That would mean that half of U.S. home prices were above $213,900, while the price of the other half was below $213,900.

The mean home price is arrived at by summing up all home prices in a particular area and then dividing it by the number of properties situated in that area. In contrast, the per square foot price of a single property is the total price or rent of that property, divided by the total square footage of the property. However, in modern cities, where the land is jointly owned by the condominiums, cooperatives, etc., the land price is not included in the calculation of the square foot price. Rent per square foot is also determined in the same fashion.

Causes For Variations In Real Estate Pricing

Improper property care, overcrowding and urban decay lead to a sharp decline in real estate values. A typical example is Harlem, where total neglect in taking care of the properties was too obvious. In several such American slums, the laxity in property maintenance resulted in the landowners setting fire to their own properties to file fraudulent insurance claims for recovering their investment. Overcrowding is another cause for concern. Several counties in California are held to be examples of overcrowding. Appreciation in real estate prices when income levels are static could make the dwellers shift from urban to suburban areas, resulting in urban decay.

However, escalating home prices can also lead to urban renaissance. Old single-home properties are converted to multi-home ones, or condominiums, or commercial complexes. In several American cities, the so-called downtown areas have blossomed into hot property hubs due to this kind of significant property appreciation.

Government policies also influence the real estate prices. Projects for improving basic infrastructure in an area will push up property prices. Contrarily, neglect of infrastructure will result in urban decay. On the whole, the whims and fancies of the buyers, the perceptions of sellers, as well as external factors mentioned above, determine real estate pricing.