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  • FORCES INFLUENCING VALUE

The value of real estate is created, maintained, modified and destroyed by the interplay of the following four great forces:

  • Environmental and physical characteristics. Examples of physical characteristics include: quality of conveniences; availability of schools, shopping, public transportation, churches; similarity of land used; and types of physical hazards. Environmental considerations include climate, soil and topography, barriers to future development (oceans, mountains, etc.) transportation systems, and access to other areas/regions.
  • Social ideals and standards. Examples of social forces include: population growth and decline; age, marriage, birth, divorce and death rates; and attitudes toward education, recreation, and other instincts and yearnings of mankind.
  • Economic influences. Examples of economic forces are: natural resources; industrial and commercial trends; employment trends; wage levels; availability of money and credit; interest rates; price levels; tax loads; regional and community present economic base; new development trends; and rental and price patterns.
  • Political or government regulations. Examples of political forces include: building codes; zoning laws; public health measures; fire regulations; rent controls; environmental legislation controlling types of new development; fiscal policies; monetary policies; government guaranteed loans; government housing; and credit controls.

Each and every one of these many physical, social, economic and political factors affect cost, price, and value to some degree. The four forces interweave and each one is in a constant state of change.

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