Major Variables that Affect a Property’s Value and Price

Macro-Location

These define long-term value stability:

• City / Metro economic strength (job growth, GDP, population inflow)

• Political & regulatory stability

• Tax environment (property tax, transfer tax, capital gains)

• Climate risk exposure (flood zones, wildfires, hurricanes, heat stress)

• Infrastructure investment (new highways, transit lines, airports)

Micro-Location

These drive price differences block by block:

• School district quality

• Crime rates and safety perception

• Walkability and access to amenities

• Noise pollution (roads, rail, nightlife)

• Views (water, skyline, park, obstruction risk)

• Future nearby developments (positive or negative)

2. Property Characteristics (Physical Attributes)

Structural & Design

• Total living area (price per sq ft / m²)

• Lot size and shape

• Number of bedrooms & bathrooms

• Ceiling height

• Layout efficiency (functional vs wasted space)

• Natural light and orientation

Construction & Quality

• Year built and effective age

• Construction materials (wood, concrete, steel)

• Energy efficiency (insulation, windows, HVAC)

• Quality of finishes and fixtures

• Structural integrity and maintenance history

Condition

• Deferred maintenance

• Renovation quality (cosmetic vs structural)

• Code compliance

• Presence of defects or required repairs

3. Legal & Ownership Variables

• Clear vs encumbered title

• Zoning classification and permitted uses

• Floor-area ratio (FAR) and height limits

• Easements and rights of way

• Heritage or landmark restrictions

• HOA or condo association rules & fees

• Leasehold vs freehold ownership

• Remaining lease duration (where applicable)

4. Market Conditions (Time-Sensitive)

Supply & Demand

• Active listings vs absorption rate

• New construction pipeline

• Vacancy rates

• Buyer pool depth (local vs foreign buyers)

Capital Markets

• Interest rates and mortgage availability

• Lending standards and LTV limits

• Investor yield expectations

• Inflation expectations

Market Cycle Position

• Expansion

• Peak

• Contraction

• Recovery

Timing alone can change value 10–40% without any physical change to the property.

5. Income & Financial Performance (Investment Property)

Revenue

• Market rent vs actual rent

• Rent growth potential

• Short-term vs long-term rental flexibility

• Ancillary income (parking, storage, services)

Expenses

• Property taxes

• Insurance

• Maintenance and reserves

• Management fees

• Utilities (if owner-paid)

Key Metrics

• Net Operating Income (NOI)

• Capitalization rate (cap rate)

• Cash-on-cash return

• Internal Rate of Return (IRR)

• Debt service coverage ratio (DSCR)

6. Comparable Sales (Relative Valuation)

• Recent sale prices (typically last 3–6 months)

• Adjustments for:

  • Size

  • Condition

  • Location

  • Time of sale

• Price per square foot benchmarks

• Market liquidity and buyer behavior

This is the most influential factor for short-term pricing.

7. Development & Future Potential (Optionality Value)

• Ability to add units or floors

• Change of use potential

• Lot subdivision possibilities

• Air rights

• Neighborhood up-zoning probability

• Highest and best use analysis

Often explains why two identical houses have very different values.

8. External & Intangible Factors