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Putting a Value on Real Property

Real property generally refers to land, but it also can include structures, bodies of water and machinery.1 It typically denotes property of significant value, which is why state and local governments choose to impose taxes on our homes.

These levies could be considered a progressive tax, in that people who own more expensive homes likely will pay higher property taxes.

For many retirees, their homes are among their most valuable assets, but they are just one piece of the financial picture. We can help you create a financial strategy that takes into account all your retirement assets and sources of income. Give us a call if you’d like to learn more about the use of investment and insurance products to help you pursue your retirement goals.

The way real property is valued can offer advantages and disadvantages to owners. During the 2008 recession and its real estate market decline, many home sellers and buyers experienced a substantial discrepancy between the appraised value and the market value of their homes.

Appraised value is how much a licensed appraiser believes your home is worth, while market value is determined by just that — the market. In other words, it’s whatever buyers are willing to pay for the property. If the market value is lower than the appraised value, owners become “upside down” on their mortgages, which means they owe more than the home is worth.2

Then there’s the case of assessed value, which is usually conducted on behalf of the county or municipality that imposes property taxes.3 This value may be less than the market or appraised value, based on a calculation of various factors. A lower assessed value generally equals lower taxes, so there’s an advantage to the assessment not increasing — particularly for retirees planning to stay in their homes for the duration of their life.

Real estate appears to be a popular asset for many affluent investors, thanks to its finite supply and the fact that demand will generally continue to grow as the population increases. A recent survey of the portfolios of affluent investors revealed:4

  • The principal residence of an affluent investor typically represents up to 30% of his or her total assets
  • Beyond the principal residence, between 4-6% of assets are in real estate
  • Among all investors, 20% own a second or vacation home
  • Among ultra high net worth investors ($5 million to $25 million), 32% own a second or vacation home

Factors that may have some impact on property values in the future relate to transportation. For example, the rise of driverless cars could have an impact on the real estate market. Transportation experts say they could make public transit less necessary to commuters, thus affecting property values near train stations and other public transit.5

Another interesting trend is in commercial real estate. You may have noticed vast, empty parking lots sitting aside malls and shopping plazas where storefronts are empty. As the country shifts more toward buying online, brick-and-mortar stores are being abandoned. Lower demand for retail shopping spaces could lower rents or require landlords to rethink how they use the space.6

Content prepared by Kara Stefan Communications.

1 Investopedia. “Real Property.” https://www.investopedia.com/terms/r/real-property.asp. Accessed April 6, 2018.

2 Angela Colley. Realtor.com. Jan. 22, 2015. “What Is a Upside-Down Mortgage?” https://www.realtor.com/advice/finance/what-is-upside-down-mortgage/. Accessed April 6, 2018.

3 Chris Seabury. Investopedia. “How property taxes are calculated.” https://www.investopedia.com/articles/tax/09/calculate-property-tax.asp. Accessed April 6, 2018.

4 Spectrem Group. 2018. “How Investors Appraise Real Estate.” https://spectrem.com/Content/-how-investors-appraise-real-estate.aspx. Accessed March 15, 2018.

5 Ely Razin. Forbes. March 11, 2018. “How Driverless Cars Could Disrupt The Real Estate Industry.” https://www.forbes.com/sites/elyrazin/2018/03/11/how-driverless-cars-could-disrupt-the-real-estate-industry/#61039ab013c1. Accessed March 15, 2018.

6 Richard Kestenbaum. Forbes. May 30, 2017. “This Is What Will Happen To All The Empty Stores You’re Seeing.” https://www.forbes.com/sites/richardkestenbaum/2017/05/30/this-is-what-will-happen-to-all-the-empty-stores-youre-seeing/#58aea44bb78b. Accessed April 6, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.


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Danielle Christensen


Danielle is dedicated to serving clients to achieve their retirement goals. As a Paraplanner, Danielle helps the advisors with the administrative side of preparing and documenting meetings. She is a graduate of the College of St. Benedict, with a degree in Business Administration and began working with Secured Retirement in May of 2023.

Danielle is a lifelong Minnesotan and currently resides in Farmington with her boyfriend and their senior rescue pittie/American Bulldog mix, Tukka.  In her free time, Danielle enjoys attending concerts and traveling. She is also an avid fan of the Minnesota Wild and loves to be at as many games as possible during the season!