The Expanding Factors of Value

It has been suggested that, to some extent, perception is reality to each person who is living out their experience of life. And this of course is reflected in our perspectives relative to the value of the real estate involved in our reality.

There is a classic meme that depicts multiple versions of “your house, as seen by…” with captions of how it appears to you (a basic house), your buyer (a much smaller house), the tax assessor (a palace), an insurance adjuster (a shotgun shack), and your appraiser (a pup tent). 

Clearly these perceptions are influenced by the lens through which the eye of the beholder is looking at the property—whether due to their financial interest, past experience with it or other properties, and of course their own personal biases, preferences or prerequisites related to factors like work, school or lifestyle.

Other factors, such as the property’s zoning can swing perceived values wildly in either direction, as such rulings dictate the amount of density and/or the range of improvements or uses that are allowed. And of late, these impacts have been felt due to factors imposed at the State level with California mandating increased density through programs and policies like SB9, AB 2097 and the Builder’s Remedy which have largely taken oversight out of the hands of local agencies and made approvals a largely ministerial process. 

While this generally has a positive impact on the value of the properties qualifying for development, it often has the opposite effect on the values of homes in the immediate vicinity, which then stand the risk of ending up in the shadow of 5 or 6 story buildings with accompanying impacts on their traffic and parking. And increasingly, neighbors have begun speaking out and fighting these types of developments, such as the one on Capitola Road which was recently appealed and sent back to the Board of Supervisors for review.

Similarly, changes in the insurance industry have impacted values particularly in rural areas deemed to be in high fire zones, where some homeowners are now paying annual premiums in excess of $10,000 under the California Fair Plan and their accompanying supplemental policies.

The way each person views a property evolves over time, generally through an expanded awareness due to personal experience and insights on the underlying conditions attributed to the location, which now increasingly comes down to factors you have to research in order to become aware of them.

When you add these to more classic factors like views, condition, access to light, noise levels, and privacy, many people find themselves drawn back to what they would have otherwise dismissed as a boring home based largely on all the problems—or potential for future problems—that it doesn’t have.