Barndominiums were first introduced in the late 1980s in New York and gradually spread through the rest of the country. As barndominiums are not as common as traditional houses, estimating the appreciation rate is difficult.
While the value of standard homes appreciates at an average rate of about 4%, the value of a barndominium may not grow as quickly. The relatively young age and limited availability of barndominiums create a lack of data.
What Determines the Resale Value of a Barndominium?
The barndominium resale value should exceed the cost of construction. Barndominiums cost an average of $30 to $120 per square foot while traditional homes cost $100 to $200 per square foot. Due to the lower cost of construction, barndominiums start with a lower value compared to homes of the same size.
After construction is completed, a real estate appraiser will likely assess the value of the property. The property value is used to determine how much you owe in property taxes each year.
Real estate appraisers look at a variety of factors when determining the value of a property:
- Comparable properties
- Square footage of living space
- Age and condition
- Extra features
- Current real estate market
Most real estate appraisers do not have experience appraising barndominiums. They may use the same criteria to assess a barndominium that they use to assess a traditional home, which may result in your barndominium being overvalued.
Here is a closer look at the factors that real estate appraisers use to determine a property’s value.
When assessing the value of a property, appraisers first look at the sale prices of comparable properties in your area. Comparable homes are also called “comps.” Appraisers examine homes with the most comparable features, such as square footage and style.
Barndominiums are less common compared to standard houses, which makes it more difficult to find comps. Instead of comparing your barndominium to the sale price of other barndominiums, the appraiser may use standard homes for the comparison.
Comparing your barndominium to standard homes may boost the value of your property. However, the availability of barndominiums in the real estate market has increased in recent years.
In regions where barndominiums are more popular, such as Texas and the Midwest, your appraiser may find more comparable properties. If barndominiums have sold in your area, you may receive a more accurate appraisal.
Location of Your Barndominium
The location of property influences its value, as homebuyers often search for homes inside specific geographic areas. Homebuyers also tend to look for locations that provide access to:
- Shopping and entertainment
- Quality schools
Barndominiums are almost exclusively found in rural areas, which limits access to many of the features that people seek. Finding a plot of land with easy access to the highway may help your barndominium retain its value better.
Square Footage of Living Space
The square footage of your barndominium is one of the most important factors for determining its value. The size of your property helps determine its base value, which is then modified based on the other factors.
The price per square foot varies from region to region. The median price per square foot for a standard house is currently about $123.
Most barndominiums cost $40 to $125 per square foot to construct. If the appraiser fails to account for the fact that your home is a barndominium, you may receive a high appraisal.
Some appraisers may also include the entire square footage of your property instead of only counting the livable space. The livable space includes the finished areas, such as the living room, dining room, kitchen, bathrooms, and bedrooms. However, many barndominiums include large garages, barns, or workshops that may be left unfinished. The unfinished area should not count toward the total livable space when appraising your barndominium.
Age and Condition
The age and condition can lower the value of a property. Older homes are more likely to suffer from wear and tear, increasing the need for future repairs. Worn roofing, siding, and flooring decrease the value of your barndominium.
If you want to increase the barndominium resale value, keep up with maintenance and repairs. Pay attention to minor cosmetic issues, such as worn flooring, and major issues, such as foundation issues or corrosion.
Certain features may increase the resale value of a barndominium. Pools, hardwood floors, and storage space are often attractive features for potential homebuyers. However, you may want to avoid including too many extra features.
A highly customized barndominium may not sell easily, as some of the upgrades may not appeal to every homebuyer. Extremely high-end kitchens, quirky interior design choices, and textured walls and ceilings may lower the value of your barndominium.
Current Real Estate Market
The state of the real estate market also influences the barndominium resale value. Home prices skyrocketed in 2020 and early 2021 due to increased demand and limited availability.
Barndominiums benefited from the limited availability of standard houses. Yet, the real estate market continually changes. As the market settles back down, selling a barndominium may become more of a challenge, which can hurt its resale value.
To maximize your potential profit, you may want to avoid selling your barndominium during a recession or sluggish real estate market.
Conclusion: Barndominium Resale Value
Barndominiums tend to maintain their resale value. You may even experience a gradual increase in value over time. However, a barndominium may not experience the same appreciation rate as standard houses.
While the value of a standard home increases an average of 4% per year, demand for barndominiums is lower in most regions. Decreased demand for existing barndominiums limits the appreciation rate.
As you likely know, building a barndominium costs less compared to building a standard home of the same size. Due to the lower costs, homebuyers often explore the possibility of building a new barndominium before looking at existing ones.
Keep in mind that barndominiums also come with lower ongoing costs, such as heating, cooling, and maintenance. The savings provided by living in a barndominium help offset the limited increase in value.
If you’re planning to build a barndominium, here are floor plans for inspiration. Check out our articles on barndominium financing and guide to barndominium insurance. Let our featured barndominiums inspire you and more information about barndominiums are available on our site, Barndominiums.co.