How does “market value” typically fluctuate?

Market value is fundamentally defined as the price that a property would sell for on the open market, assuming that both the buyer and seller are informed and acting in their own best interests. This value is not static; it fluctuates based on a variety of factors, with economic conditions and demand playing pivotal roles.

When the economy is performing well and there is high demand for properties, market value tends to increase. Conversely, if the economy is struggling or if there is an oversupply of properties, market value may decrease. Factors such as interest rates, employment levels, and consumer confidence can all influence these fluctuations. Demand for real estate is also affected by external factors like population growth, urban development, and shifts in consumer preferences, all contributing to changes in market value over time.

In contrast, options that suggest constant value, exclusivity to appraisers, or reliance solely on previous sale prices overlook the dynamic nature of real estate markets. Market value reflects current market conditions rather than remaining unchanged or being wholly reliant on past data or appraiser opinions. This underscores the importance of understanding not just economic indicators but also broader market trends when assessing property value.