By Michael R. Sikora on 2/26/2011
Here are two examples to help you how location can make such a difference:
A two bedroom, two bath condo in Manhattan, New York:
- Market Value $1,400,000
- Equitable Value $610,000
- Replacement Cost $390,000
Due to the affluence of the area and demand, the market value is substantially higher than the replacement cost. The owner has nearly 50% equity stake in the property.
A two story, four bedroom, two and a half bath home in Dallas, Texas:
- Market Value $199,000
- Equitable Value $209,000
- Replacement Cost $241,000
An overabundance of properties for sale drives the market value down below the cost to replace it and causes the owner’s equity in the home to be negative.
