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jhorrocks/Getty Images June 21, 2022 Rae Hartley Beck is a writer and editor with over eight years of experience in personal finance. Her work has most recently appeared in Bankrate, MoneyWise and Investopedia. Rae specializes in credit card rewards, investing, real estate, home improvement, lending and financial advice for millennials, Gen Z, Gen Alpha and their parents. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Bankrate logo The Bankrate promise
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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Home price appreciation has been relatively easy to achieve with the astronomical gains of the housing market over the last several years. But that’s starting to slow now as . Learning how home appreciation works — and how to make it work for you — can help you weather any type of market conditions.
What is real estate appreciation
Real estate appreciation is the increase of your home’s value over time. The inverse would be real estate depreciation, which is the decrease of your home’s value over time. Home values have soared in recent years: In January 2022 average nationwide real estate appreciation reached 19.1 percent, the highest level in 45 years, according to the . However, there are signs that things are now cooling off. New single-family home sales in April 2022 fell 26.9 percent from April 2021, and the U.S. Department of Housing and Urban Development. Those who have been in their homes for a while will likely retain the appreciation they’ve benefited from over the last few years, but future appreciation may be slower or harder to come by.
How is appreciation calculated
Calculating real estate appreciation is simple. Take the and subtract the home’s original purchase price. If you’re not sure of your home’s original purchase price, you may be able to see the sale amount on a website like Redfin or Zillow. Once you have the difference between the price you paid and your current , divide that number by the original value. For example, say you purchased a home in April 2019 for the nationwide median sale price at the time, which was $289,052, . If that home were now valued at the April 2022 nationwide median sale price of $424,146, that would be an appreciation rate of 46.7 percent. ($424,146 minus $289,052 equals $135,094, and $135,094 divided by $289,052 equals 0.467.) An online can help you run the numbers.
What s the average home appreciation rate
Not everyone experiences the wild increase in home value of our hypothetical example above. According to the CaseLogic report, in January 2022, the nationwide annual appreciation for detached properties was 20.3 percent. For attached properties it was slightly lower: 15.2 percent. In addition, the average rate of home appreciation varies greatly by location. For instance, the was 19.7 percent from December 2020 to December 2021, while over the same time period was 11.9 percent. Breaking down statistics by county and by city yields even more drastic differences.
Ways to add value to your home
Of course, you don’t have to just sit back and passively hope for your home’s value to increase. You can actively help things along by undertaking . By investing in projects that can increase your potential sale price, you can maximize your home’s appreciation. Big projects rarely provide a 100 percent return on investment — but that’s not necessarily a reason to avoid them. The National Association of Realtors’ yearly also accounts for what the NAR calls a “joy” score, accounting for the happiness homeowners reported with their renovations while still living there. If you’re looking for a more enjoyable house now with a greater resale value later, here are a few projects worth focusing on. Refinishing hardwood floors wins it all with a huge estimated cost recovery rate of 147 percent, and a perfect joy score of 10 (out of 10). Converting an attic into living space has an estimated cost recovery rate of 75 percent, with a joy score of 10. A complete kitchen renovation also has an estimated cost recovery rate of 75 percent and a joy score of 9.8. For those on a tighter budget, there are many ways to , without spending a fortune. These include deep cleaning and decluttering, freshening paint and updating lighting fixtures and kitchen hardware. Bottom line
Home price appreciation is the increase in your home’s value over time. With the extremely hot housing market of the last several years, home price appreciation rates have been extremely high. But the record breaking gains we’ve been seeing, for the last year in particular, are unlikely to continue. SHARE: Rae Hartley Beck is a writer and editor with over eight years of experience in personal finance. Her work has most recently appeared in Bankrate, MoneyWise and Investopedia. Rae specializes in credit card rewards, investing, real estate, home improvement, lending and financial advice for millennials, Gen Z, Gen Alpha and their parents. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Related Articles