Buying a home is one of the largest purchases most people will make. Because homes are relatively expensive, understanding how they may increase or appreciate in value over time is important. If you understand a home's average appreciation rate you'll be able to make better financial decisions related to selling it, improving it, renting it or even keeping it, for one.
Home Appreciation Basics
A well-maintained home with no structural issues or other flaws, including drops in surrounding neighborhood quality, tends to appreciate over time. National and local economic health, though, also affects a home's value increases or decreases. In many cases, a home's average appreciation rate is comparable to the national inflation rate at any given time. At publication, homes are projected to appreciate in value at a rate of 1 to 2 points above the inflation rate through 2020.
Home Appreciation Rate Factors
A home's size, its location, the age of its neighborhood and any improvements or renovations also affect its specific value appreciation rate. Economic turmoil, such as was seen during the housing market crash in 2008 and the Great Recession of 2009, also affects the average appreciation rate of homes.
Improving Appreciation Odds
Stable neighborhoods with well-maintained properties improve the odds that individual homes will appreciate in value. Adding the right type of improvements to a home, such as a remodeled kitchen or bathroom or adding a bathroom, may help ensure greater value appreciation as well.
- Investopedia: Top 4 Things That Determine a Home's Value
- U.S. News and World Report: The Future of Home-Price Appreciation
- Market Watch: U.S. Home Value Appreciation Expected to Top 6 Percent in 2013 as Rising Interest Rates Fail to Derail Recovery -- So Far
- Zillow Real Estate Research: What Does ‘Normal’ Home Value Appreciation Look Like?
- U.S. News: Renovations That Yield the Best Return on Investment