A home is often the most important investment a person makes. Even a layman who has studied the home market trends over the years has learned that when the value of the home goes up, so does the consumer spending. The reason for this is psychological. The increase in price of the home, his most important investment, often gives the consumer a sense of security even if the increase in price is not tangible.
Market value of a home is the price that seller can expect to receive from a buyer in a fair and open negotiation. The price is mostly dependent on factors such as location, the total square feet, age of home and so on. However a renovated kitchen or brand new carpet may not fetch a good price if there are certain external factors at play. These include the overall health of the economy, job market, long-term interest rates, current unemployment situation etc. As we have only recently seen, these factors can sometimes play a huge role in determining the price of a house. The FDIC site has a good article on all the external factors that affect the market value of a home.
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