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Factors Affecting the Price of a Home

The size of a house and the number of bathrooms are important in determining its price, but the neighborhood affects the home’s price most. That’s what the National Association of Home Builders found when analyzing the Census Bureau American Housing Survey.

In the study, a standard home was assumed to have 1,900 square feet of floor space, three bedrooms, two baths, three other rooms, a basement and garage.

Twelve Key Factors

The study showed that there are twelve key factors that significantly impact the price of a standard house, in addition to age, location (urban, suburban or non-metropolitan) and region of the country:

  • Square footage
  • Number of complete bathrooms - toilet, sink, and tub or shower
  • Number of bedrooms
  • Number of rooms other than bathrooms and bedrooms
  • Presence of a garage
  • A basement
  • Central air conditioning
  • A fireplace
  • A body of water within 300 feet of the house
  • Roads nearby that are in need of repair
  • Abandoned buildings in the neighborhood
  • Trash, litter or junk in the neighborhood

The analysis found that when all else is equal, increasing the floor space or the number of bathrooms, bedrooms or other rooms; adding a fireplace or locating the house near a body of water increases the price. However, eliminating the basement, garage, central air conditioning or one of the bathrooms; or locating the house near bad roads, litter or abandoned buildings reduces the price.

For example, the presence of abandoned buildings in the neighborhood reduces the price more than 30%. On the other hand, adding a third bathroom increases the price more than 17%. The table below shows the impact on price of various housing characteristics. You may want to take this information into account when deciding whether to remodel your home or move on.

Impact of Characteristics on Home Prices

Increase in Value
Body of Water within 300 Feet 27.8%
Adding a Third Bathroom 17.5%
Adding a Fireplace 10.8%
Adding 500 Square Feet 9.4%
Adding a Room
(Other than a Bathroom or Bedroom)
5.6%
Adding a Fourth Bedroom 5.2%

 

Decrease in Value
No Basement -3.1%
Poor Roads Nearby -6.5%
No Central Air -12.8%
Trash in Area -14.5%
No Garage -14.6%
No Second Bathroom -18.5%
Abandoned Buildings -30.7%

 

If remodeling makes sense for you, Dollar Bank can help. We have a wide selection of loans and lines of credit - one is sure to be right for you. Just talk to a Dollar Bank representative for more information or to apply.

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