You may think this is a strange question, and one that only a few people may consider. However, colors do influence the market value of certain hard assets (such as homes and cars.) They also have a social impact. You may not have consciously thought of it, but colors send strong social signals. Have you ever thought about the color of your house, clothes, cars, or other belongings in relation to an image you would like to project? Or how colors can impact valuations?

Market values tend to be consistently better for houses, cars, and other personal property items that have broad appeal, and perhaps even a “rich” classical look. Perhaps the colors associated most with a rich look are white and black. 

Let’s start with the color white: Because white is so difficult to keep clean, it tends to have a rich connotation. In the bookthe Secret Lives of Color (St. Clair, K. (2017) Penguin Books, p. 40) the author says, “White has long been intricately connected with money and power. Fabrics, including wool and cotton, had to be heavily processed in order to appear white. Only the very wealthy, supported by battalions of staff, could afford to keep the fresh lace and linen cuffs, ruffs, and cravats worn in the sixteenth, seventeenth, and eighteenth centuries pristine. This connection still holds true.”

Then there’s black: Black gains its rich look not because it is difficult to clean, but because of its formality. For women, the little black dress is a wardrobe essential, because it can go anywhere from the grocery store to a cocktail party. For men, nothing compares to a black tuxedo for a rich, formal look. Limousines are black, as are butler uniforms, and other accoutrements of the billionaire class.

Perhaps even more important than the foundational black and white are the metals: Gold, silver, bronze, etc. Gold traditionally has been the king of the metals for a rich look. However, decorating and current cultural trends may over-ride the appeal of gold for certain accessories in the home and the trim on cars. The rich look of gold may work best in small doses, with too much gold looking garish. 

There are other colors that have a rich connation, but these do tend to change over time. When I was a teenager, I remember navy blue was consider a classic rich color that was widely available with cars, clothes, shoes, and in home décor. Now, it is difficult to find. Another example that was considered rich at one time is yellow. In the Secret Lives of Color, Imperial Yellow is a color so named because in the history of China, this color was reserved for rulers.  At the beginning of the Tang dynasty, common people were forbidden to wear it. (St. Clair, 2017, pp 85-86). 

You may not have considered the importance of knowing the colors that look rich, but this awareness also helps if you are ever trying to convey an image. For example, I knew a man once who would intentionally dress “poor” when he went shopping for cars. He avoided the starched white shirt, crimson tie, and black suit (his normal attire), and would wear old, ragged denim overalls and a faded pale brown t-shirt. Why? He wanted to improve his bargaining position. He believed that if he showed up looking wealthy, the dealer would have an upper hand in the negotiations. But if he looked like he didn’t have a dime to his name, his low-ball offer may be accepted by a motivated seller—perhaps a salesperson trying to make his quotas. He obviously had a keen awareness of colors, and the impact attire could have on his ability to get a good deal.

While you may not be interested in the social aspects of color signals, it is still important to understand how colors could impact value and the value of your assets. For example, if you were to look up the value of your car in the Kelly Blue book (a good source of current market values for cars), you may discover for the exact same car, the color choice will affect its value. A burnt orange car will generally have a lower value than the same exact car that is silver or white. A purple car (yes, they do exist) may have the lowest value. 

I learned from an interior decorator years ago that he thought the key to a rich look was muddy colors verses clear colors. The muddy or muted look was more subtle and seemed to blend better with the aesthetics of a home. He also believed it positively impacted a home’s market value.You may not have realized the extent to which color choices impact market value and influence other areas, such as social cues, but they can be significant. So, the next time you fantasize about painting your house fuchsia or buying a neon green car, you may want to consider other options. While these playful colors may make a bold statement, they may not be a wise financial decision.

References

The Secret Lives of Color, Kassia St. Clair (2017) Penguin Books

https://www.bhg.com/home-improvement/exteriors/curb-appeal/best-exterior-paint-colors-to-sell-home

https://www.housedigest.com/388980/exterior-house-colors-you-should-avoid-using-at-all-costs

https://www.themanual.com/auto/car-colors-with-best-and-worst-resale-value-report

Kristina Bolhouse, CPA/PFS, CFP®

Vice President/Shareholder

© 2024 Kristina Bolhouse and The Arkansas Financial Group, Inc., All rights reserved.

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