You may not think of your home as an investment, but in reality, you want it to be worth as much as possible. Even if you're not planning to sell it immediately, there's comfort in knowing that if you were to put it on the market, it would command a decent purchase price. Along these lines, it pays to recognize the factors that could indicate a decline in your home's value. Here are a few to be aware of.
1. Your property taxes have gone down
A lower property tax bill may seem like something to celebrate. But remember, property taxes are calculated by taking the assessed value of your home and multiplying it by your local tax rate. If your tax rate doesn't change but your taxes go down, the reason is because your home isn't worth what it used to be.
2. School classrooms are getting more crowded
Schools are generally funded by property taxes. But when local businesses start packing up and people start moving out, your town starts collecting less property tax, which means there's less funding available for schools. The result? More students crammed into classrooms and fewer resources available to them. And thus begins a cycle where your school district's rating goes down, and your home's value follows suit.
3. Businesses are leaving town
Local businesses with a steady stream of customers tend to stay put and enjoy that foot traffic -- and revenue. But when that ceases to exist, businesses are apt to move elsewhere, and that, in turn, could devalue your neighborhood as a whole.
4. Nearby houses are taking a long time to sell
Homes that sit on the market for a long time usually aren't the most desirable. If your neighbors have been struggling to sell their homes, it could be that values are generally declining in your area -- and that extends to your home as well.
5. Houses in your neighborhood are selling for less than they used to
It may be that your home offers features that your neighbors' homes don't. But if that's not the case, and you see that nearby properties are selling for much less than they used to, assume that your home isn't worth what it once was.
What to do if your home is losing value
If your home's value is on the decline and you're not looking to sell it anytime soon, then you may be able to sit back, sit tight, and wait for the local housing market to come back up.
But if you are planning a near-term sale, you'll need to think strategically. That could mean checking out the properties nearby that have sold quickly and for top dollar, and seeing how yours stacks up. You may need to consider a few renovations to make your home more marketable, though keep in mind that spending money to get more money for your home will likely result in a break-even situation at best.
Most of all, though, recognize the signs that your home may be losing value, and ask a real estate agent if it might pay to list it quickly -- before things get worse.