Countless people have been affected by the economic recession that hit in later part of 2008. Most people know that the housing market was heavily hit with declining prices, but many do not know the first thing about how houses are priced. The process of pricing houses is not as complicated as many think. Realtors in Fort Walton Beach FL can help future homebuyers understand this process easier. |
First off, it is important to understand how a home value is determined. The way that an appraiser determines the price of a home is by developing a model. Things that go into the model include location, bedrooms, bathrooms, size of lot, square footage, etc. a good appraiser will have a model that has a proven success rate at predicting home values. After the home attributes have been run through the model and a preliminary price is given, the appraiser will compare the home with similar ones in the area that have sold recently, and adjust the price accordingly. These changes vary a lot on location as a home in Missouri will not sell for the same amount as an identical home in southern California.
Because some homes in the economy were being valued less, this led to a devaluation of all homes due to this pricing method. Because people’s homes are not worth as much, there are a lot of people who should have sold their homes but who will not because they are not worth as much as they once were. This, along with higher default rates, has changed partially due to the economic collapse.
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