What Is the Average Real Estate Appreciation Rate?

What is the average real estate appreciation rate?

According to the S&P CoreLogic Case-Shiller U.S. National Home Price Index, the appreciation rate was reaccelerated in April 2024, recording a 6.4% year-over-year gain. While this is a national average, the appreciation rate where you live may be higher. For example, in the fourth quarter of 2023, homes in Rhode Island and Vermont saw remarkable increases of over 13%, as reported by Statista.

In recent years, homeowners have experienced substantial jumps in appreciation rates. For instance, in January 2022, the nationwide annual appreciation for detached properties, such as single-family homes, reached 20.3%, while attached properties, like townhouses, saw a 15.2% increase, according to CoreLogic’s Home Price Index (HPI).

However, recent sales data indicates a slowdown in home appreciation rates due to higher interest rates and home prices. Despite this, CoreLogic’s HPI forecasts another year of gains, averaging over 4%. The ongoing high demand and limited supply continue to influence the market, with many U.S. markets remaining overheated.

How is real estate appreciation calculated?

Calculating real estate appreciation is straightforward and can help you get a better idea of how much your home has grown in value over the years. It takes only two steps.

1. Identify the home’s original price and current value
2. Apply the home appreciation formula

The formula is simple: take the current value of your home and subtract the home’s original purchase price. Then divide the difference by the original value, and times it by 100 to get the percentage figure.

Appreciation rate = (current value – original price) / original price x 100

Home appreciation 5-year rate example

• Current value: $425,000
• Original price: $290,000 (purchased five years ago)
• Appreciation rate: 46.55%

($425,000 – $290,000) / $290,000 x 100 = 46.55%

Based on this example, the home has appreciated in value by 46.55% over the past five years. This breaks down to an average appreciation rate of about 8% per year.

You can also use an online percentage calculator to simplify the process. Just enter the two values, and the calculator will do the math.

Specific ways to increase home value

Here are some ideas you might consider to increase the value of your home:

1. Upgrade your kitchen and bathrooms

2. Convert a room or build a home office

3. Finish your basement

4. Refinish hardwood floors

5. Open up the floor plan

6. Install a steel front door

7. Replace your aging or ugly garage door

8. Update your mailbox (next-generation box)

9. Paint your home (neutral colors)

10. Replace an aging HVAC

11. Add a parking spot

12. Add a deck or patio

13. Install new siding

14. Put in a fire pit or outdoor fireplace

15. Dress up your front porch

16. Put in an outdoor kitchen

17. Consider a pool or hot (depending on your location)

18. Put in energy-efficient appliances and windows

19. Install smart features (programmable thermostats, security cameras, etc.)

»Learn more: To explore each of these suggestions and more, see our post: What Upgrades Increase Home Value?

What can hurt a home’s value?

Below is a list of things that can lower your home’s value. Some of these you can control, and others are directly connected to the location or circumstances of your property.

1. Deferred or neglected maintenance

2. Home improvements done wrong or not built to code

3. Outdated kitchens and bathrooms

4. Shoddy workmanship

5. Bad or ugly landscaping

6. Frail or damaged roof

7. Noise pollution

8. Registered sex offenders in the area

9. Neglected houses nearby left vacant or deteriorating

10. Traffic or airport noise

11. Poor location (neighborhood decline, crime rates)

12. Neighbors with yards that need attention

»Learn more: To read about each of these factors and more, see our post: 12 Things That Can Hurt Your Property Value and Which Ones You Can Fix.

What is the 5-year rule in real estate?

The 5-year rule in real estate suggests that homeowners should ideally stay in their property for at least five years before selling. This rule is based on the idea that it takes about five years for the appreciation in home value to outweigh the costs associated with buying and selling, such as closing costs, moving expenses, and real estate agent commissions.

During this time, the property’s value is likely to increase, providing a higher return on your investment when you eventually sell.

For example, if you purchased your home five years ago for $350,000, and it appreciated at an average rate of 5% per year, after five years, your home would be worth $446,699. This is a significant increase in value, making it more financially beneficial to sell.

You can use an online home appreciation calculator to calculate different appreciation rates based on your home’s original purchase price and how long you have owned it.

Can I use my equity to buy before I sell?

Yes, you can use your home equity to purchase a new property before selling your current one. Leveraging your equity can provide the funds you need, allowing you to move seamlessly without the pressure of selling first. HomeLight’s Buy Before You Sell program simplifies this process.

Here’s how HomeLight Buy Before You Sell works:

This modern program reduces the stress and uncertainty of trying to coordinate buying and selling simultaneously. With HomeLight Buy Before Your Sell, you can make one move with more peace of mind.

Get the most out of your home with a top agent

Maximizing your home’s appreciation requires strategic planning and expert guidance. A top real estate agent can help you identify and implement the most effective improvements, set the right price, and market your home to attract the best buyers.

To find a top-rated agent, use HomeLight’s free Agent Match platform. It connects you with experienced agents in your area who have a proven track record of maximizing home value and ensuring a smooth selling process.

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