Understanding Property Valuation  in a Competitive Market

Understanding Property Valuation in a Competitive Market

  • Brenda Freeman
  • 03/17/22

For buyers and sellers alike, it’s crucial to know the current value of a property to determine the fairest price. In a competitive market, it’s essential to make sure you understand the actual value of your home or a home for sale. This information will ensure you list your property at an accurate and fair price and provide tips on not overspending on your new home.

What is property valuation?

Property valuation is the process of estimating the worth of a property over time. This occurs to determine how much the property owner will pay in taxes or help calculate insurance premiums. It’s critical to note that construction cost and sales price don’t necessarily reflect the actual value. As perhaps the best marker of a property’s worth, Grand Lake realtors are familiar with the term “fair market value” and what this means to their clients. Those looking at Grand Lake property for sale should know that a property’s fair market value, or FMV, is the price it would sell for in a balanced market.

Buyers should note that FMV differs from actual market value in that FMV is a hypothetical amount at which the property would sell—while the market value is the price at which the property sells. To complete a successful property valuation, consider current market conditions, the property’s financial history, and, if applicable, the property’s capitalization rate (which is equivalent to the gross rental yield after operating expenses).

How is property valuation calculated?

Various methods can calculate property valuation for Grand Lake real estate for sale. Grand Lake realtors providing property valuation estimates to clients selling their primary home are likely to use one of the most common methods: reviewing comparable sales. This involves looking at recent sales in the area to see the final selling price of similar houses over the past several months. Other factors to consider include the size and age of a property and current market conditions.

Another method used is the cost approach, typical for communal buildings that do not generate income, such as churches or schools. Using the cost approach, Grand Lake realtors estimate how much it would cost to rebuild or replace the property.

The final method of property valuation is the income approach, which estimates the value of a property based on its ability to generate income. Looking particularly at Grand Lake property for sale, the revaluation done by the county consistently lags 18 months behind the actual market. The 2021 reappraisal year covers sales between July 1, 2018, and June 30, 2020. In the last few years, taxes have not caught up to today’s market, but Grand Lake realtors are slowly starting to see an increase. In other words, Grand Lake property owners have been paying lower taxes for many years, and now tax rates are catching up with the strong real estate market.

What is impacting the current market?

Looking at the Grand Lake real estate market over the last several years, prices have been steadily increasing due to a lack of inventory. Since the emergence of COVID-19, the market has become increasingly competitive, and taxes will continue to climb for the foreseeable future. When a general market downturn arrives, taxes will continue to be high until at least 18 months after prices drop again.

The median sale price of Grand Lake homes increased to $1,195,000 in 2021. The list price median of $1,195,000 showed homes selling at the asking price, a half-million increase in median sales price from 2020 when the list price median was about $744,000. The median sold price per square foot in Grand Lake in 2021 was $377, up $30 from 2020. With increased home sale prices, Grand Lake realtors see a much larger median in days spent on the market, with a 2021 median of 78 days compared to 23 days in 2020.

Grand Lake’s value

Grand Lake is a beautiful village on the shore of the largest natural lake in Colorado. Grand Lake is located in sight of the Rocky Mountain National Park and provides convenient access to outdoor activities like fishing, hiking, and biking. Many people who visit Grand Lake consider purchasing homes or cabins in the area to take advantage of its beauty and proximity to recreational areas. Rocky Mountain National Park, Adams Fall East Inlet Trail, and the Winter Park Ski Resort are all day-trip accessible from Grand Lake.

Rocky Mountain National Park is one of the most beautiful places in the country and is just a short drive from Grand Lake. The park offers opportunities for hiking, camping, and sightseeing. In the winter months, visitors can enjoy guided snowshoe tours. If you're looking for a short, easy hike that’s sure to please the whole family, try the Adams Fall East Inlet Trail, which is less than a half-mile long, though hikers can continue an extra mile for a view of Mount Craig (also known as “Mount Baldy”). It’s important to note that dogs are not permitted on this trail.

Skiers and snowboarders living in Grand Lake can check out Winter Park Resort, ranked the #1 ski resort in North America by USA Today, and located less than an hour away from Grand Lake. With 3,000 acres of ski and snowboarding trails and seven different areas to accommodate every skill level, this resort is perfect for beginner and expert snowboarders and skiers alike. Be sure to try a ski bike or snowcat tour for a unique experience on the slopes.

Looking for a new home in Grand Lake?

If you’re considering purchasing a home in Grand Lake—or selling your existing Grand Lake real estate—reach out to realtor Brenda Freeman for local expertise and personalized guidance through your entire real estate journey.

*Header photo courtesy of TheHouseShop

Work With Brenda

Brenda’s clients appreciate her high attention to detail, strong market analysis, and proven price and appraisal training. Her professionalism and dedication are yet another benefit.