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Your home is unique because it’s not just a place where you live; it’s also a real estate investment, too. That’s why it’s a good idea to have some idea about how much your home value might increase over time.
Smart real estate investors — yes, including you — can use this information to make better decisions about including your home in your comprehensive wealth management plan. We’ve provided a simple home appreciation calculator that anyone can use to calculate this number.
Home appreciation: an overview
The average annual appreciation rate for homes in the U.S. typically fluctuates between 3% and 5% per year. In other words, for every $100,000 in home value at the start of the year, you can expect it to be worth $3,000 to $5,000 more by the end.
Home appreciation can vary a lot depending on many different economic factors. The broader housing market — i.e., supply and demand — has a large impact on home appreciation. When interest rates are high, for example, fewer people are interested in buying a home, driving down home prices.
Large economy-wide changes in market conditions can also impact appreciation. For example, Nevada residents saw average appreciation rates of -60% during the 2008 financial crisis, when home values plummeted instead of rising. Some areas are also just more popular with buyers, driving up home appreciation in certain real estate markets like California.
How the home appreciation calculator works
Using the future home value calculator is simple. First, provide information on your home’s sale price. Then, specify what type of appreciation scenario you’re interested in.
- Starting home value: How much you paid for your home. If you inherited your home, use the fair market value at the time you received it.
- Appreciation period: The number of years you’re comparing across. Most home equity investments (HEIs) and mortgages use a 30-year term length.
- Home appreciation scenario: Choose between three scenarios: low, medium, and high. This will give you a good idea of the range of appreciation you might see.
The calculator will then estimate the following two numbers:
- Appreciation in value: Your home’s increase in value over the specified period of time, based on a best-case, average, and worst-case scenario.
- Total home value: Your home’s total value — consisting of appreciation and the starting home value — after the specified amount of time.
You can use this information for planning purposes, such as when you’re creating your estate plan or considering future housing finance options. For example, some companies, such as Point, use your home’s appreciated value — rather than its total value — to calculate the amount of money you have to repay when you borrow against your home equity.
Tips to increase home appreciation
Focusing on the same things that increase your home’s value can boost your home’s appreciation, too; after all, the two numbers are tied together.
Keep up with home maintenance and repairs
Properties as a whole generally increase in value, but the homes themselves sometimes decrease in value as they age — especially if you don’t make home maintenance a priority. Not only are buyers quick to sniff out poorly-maintained homes, but they can be a safety hazard, too.
Experts recommend budgeting between 1% and 4% of your home value per year for regular upkeep. You can make things simple by setting up automatic monthly deposits into a separate savings account for your home that you don’t touch until it’s time to call out a repair technician.
Make smart home improvement decisions
Not all home improvements will increase your home’s value. After all, social media pages are full of homeowners who’ve made rather interesting choices with their home design but later struggled to find buyers.
You don’t have to plan your home upgrades entirely around appeasing future buyers, but it’s a good thing to keep in mind nonetheless. Some home upgrades also yield better returns on your investment (ROI) than others and may be worth pursuing first. Here are a few cost and ROI examples based on The Journal of Light Construction’s 2024 Cost vs. Value Report:
- Replacing your garage door: $4,513, 194% ROI
- Installing a new steel front door: $2,355, 188% ROI
- Adding a manufactured stone veneer: $11,287, 153% ROI
- Building a fiberglass-based grand entrance: $11,353, 97% ROI
- Kitchen remodel with midrange finishes: $27,492, 96% ROI
Vote for community-friendly policies
There’s not much you can do about national economic policies and market conditions, but you may be able to impact local policies in a way that can boost your home value over the long run.
Your community will change and grow over time, and by voting or taking a more direct role in shaping local policies, you can indirectly increase the value of your home and that of your neighbors. Here are some examples of policies that have been shown to boost home values:
- Increased spending on schools
- Expanded access to affordable housing
- Reliable and widespread public transport options
- Preserving public open spaces like parks and green belts
Frequently asked questions
How do you calculate the appreciation of a house?
It’s easy to calculate a home’s appreciation by subtracting the starting and ending values from its sales history. You can also use tools like the home appreciation calculator on this page to estimate the future change in home value if you still own the home.
How much will a house appreciate in 10 years?
Real estate professionals generally cite average appreciation rates of 30% to 50% over a 10-year period. The exact amount will vary depending on broader economic conditions which happen over time, along with how well you maintain and improve your home.
How do you estimate the appraisal value of a home?
Getting a professional appraisal is the best way to determine the market value of a home. You can also get an opinion from a real estate agent or use home value estimators on websites like Zillow and Redfin, which use automated valuation models, although they’re better for ballpark figures rather than accurate numbers.
Final thoughts
Home appreciation is one of the biggest benefits of homeownership. Think of it as the return on your investment — your home’s way of giving back.
Many of the factors influencing your home’s appreciation, like market and economic conditions, are outside of your control, but there’s a lot you can influence, too. If you take care of your home well and improve on it, it’ll reward you with better living conditions — and better financial returns, too.
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