Historically homes have appreciated over time. This is a good thing. Homes are by far the most expensive venture the average American will make in their lifetime. Part of the reason why consumers are willing to pay so much money is for the security, protection, comfort, and ownership over ones life a home offers. The other part is that homes have historically been safe, secure investments slowly appreciating over time.

The reality of homes is that the actual structure depreciates over time. The walls crack, the foundation cracks, the roof leaks, the paint chips, the cabinets break, and the overall structure loses the value it had at the time it was built. The real reason homes have appreciated in value is the value of the land they sit on. As land becomes increasingly scarce, its value increases also. This is true with any commodity. Although water is one of the most import resources or commodities humans have in life, it is also plentiful and therefore relatively cheap. If a world wide drought hit the earth, water would become one of the most expensive resources on earth because of the need for it and the scarcity. So as less and less land is used for housing and the same land is recycled, the price increases. This is why homes in newer subdivisions seem to continue to appreciate in value over time.

Because it is the land that is critical to the value of the home, a home buyer should look at the home as if it is an investment. The buyer should purchase the home based on location and the potential for the value of the home to continue to increase. When a buyer does not look at the potential value of the land or the potential growth of the property, they could be severely limiting the growth in the homes equity over time.

With that said the home that is on top of the land can add to or take away the value of the property. If the home depreciates in value until it is uninhabitable, it could potentially make the property worth less than what it would be worth if it was empty. This is why it is wise to put capitol and resources into the home at intervals to keep the depreciation to a minimum thus maximizing the value of the home.

So understanding that the home on a property needs to be maintained and that the land is what is automatically increasing in value as it becomes more and more scarce with an increasing population makes it very clear that the location of the land and the home is the most important aspect of the home. Even the smallest home in a neighborhood that is appreciating in value will turn out to be a fantastic investment, even more than the biggest home in a appreciating neighborhood. This is a result of the fact that homes go up by the same number in the neighborhood usually and so if all the homes go up by thirty thousand dollars in three years, the one with the smallest home just made the highest return on their investment.

Author Bio: Juhlin Youlien writes about Paradise Valley AZ homes for sale, Gilbert AZ homes for sale, Fountain Hills AZ homes for sale and homes for sale in Phoenix Arizona.

Category: Real Estate
Keywords: homes for sale, real estate, buying a home, selling a home, loan, mortgage, foreclosurehomes for sal