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'What's it Worth?' vs. 'What's Worth it?'

These are two very different yet equally important factors in the home buying and selling process.

What's it Worth = what is this home listed for/how much does it cost?

What's Worth It = what is the value of this home as it relates to my needs and wants?

First, there is the cost of a home, or what it's worth. In economic terms, the cost of a home is based on things like materials used to build the house - wood, concrete, brick, granite. Or you could look at it in terms of the cost to upgrade a kitchen or a bathroom.

According to, a minor kitchen renovation in the Boston area will cost you $21,700, with a $19,195 resale value which can result in an 88.5% recoup in costs.  That's a pretty good return on investment and is probably worth it.

Then there is the price what the home might sell for. If you invest in that kitchen renovation chances are you can get a higher price on your home.  But price is largely the result of consumer demand, and the 'right price' depends on how many people are willing to step up to make an offer. As we've quoted in past regarding this issue, "There is no 'your price' or 'my price.' There is only 'the price' the market is willing to pay." - CRSConnect

When talking about price and cost in real estate you can't neglect the impact of interest rates. KCM Group just explained a recent Money Magazine real estate issue, which states: The average interest rate on a 30-year fixed loan is predicted to climb from the current 4.4% to 5.3% by the 2015 spring buying season, according to Freddie Mac. For a $250,000 loan, that means that a borrower who waits would pay $136 more per month and an additional $49,090 in interest over the life of the loan."

So while we know prices of homes in the Boston area have steadily risen over the past few years, the long-term cost of a home is poised to go up. In this case waiting for prices to come down may not be worth it because you'll end up paying more in the long run.


And finally there is value. Value is that rouge metric that can either upset the apple cart or make for smooth sailing. Value is a variable that can change with the March wind.

There is the economic value, and resources like Trulia's Bubble Watch "reveal whether home prices are overvalued or undervalued relative to their fundamental value by comparing prices today with historical prices, incomes, and rents."

These metrics are all well and good - they give us a general feel for where the market is and where it might be going. But real estate values vary by region, by state, by town and even by neighborhood.

You might value an open concept, granite counter tops and a master suite. You might value a nice suburban neighborhood with good schools over a short commute. Or you might value walkability to shops and restaurants above all else.

When it comes down to home values, only you can determine whether what it's worth ($) is worth it to you (<3).


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