What Does It Mean If Your Home Appreciates?

The word “appreciate” can be defined as the act of recognizing something is valuable or important. Another form of the word means something increases in value. Both meanings can apply to a home. But when it’s time to sell or borrow, what does it mean if your home appreciates?

In this post, we’ll help you gauge the growth of your home’s value. We’ll also show you how houses have appreciated over the years for comparison, and provide 19 specific ways you can boost property value.

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What does it mean if your home appreciates?

When your home appreciates, it means the value of your property increases over time, leading to a larger profit when sold. Your home’s appreciation rate is typically tied to market trends, neighborhood growth, and home improvements. In short, the more your home appreciates, the more equity you have in it.

This increase in value is what every homeowner wants — giving you more options when it comes to future financial decisions, like selling, refinancing, or taking out a home equity loan.

How much do homes appreciate each year?

U.S. home prices have increased by an average of 4.63% annually, based on Trading Economics’ House Price Index from 1992 to 2024. Looking back even further, homes in the U.S. have appreciated by about 3% to 5% per year.

Appreciation rates reached an all-time high of 19.10% in July 2021 and a record low of -10.50% in November 2008. The graph below shows the final 4th-quarter seasonally adjusted price appreciation rates each year for the past decade.

In some areas, homes may appreciate at much higher rates, while others might see slower growth or even stagnation. For instance, cities with booming job markets or limited housing supply often see faster appreciation.

What helps your home appreciate in value?

As with any physical asset — a house, car, boat, or RV —  the care you give it plays a big role in what others think it’s worth. However, there are also things that may be outside of your control that contribute to a home’s appreciation over time. Here’s a look at the key factors that affect a home’s value.

• Prices of nearby comparable homes
• The neighborhood and community
• The age and condition of the home
• The size of the house (square footage)
• The state of the housing market and economic conditions

Of these five, the two factors you can actually influence are the “condition” and “size” of your home. You can invest in upgrades or add livable space to increase its value. Next, let’s look at some examples of things you can do to add to your home’s appreciation rate.

19 specific ways to boost your home’s value

1. Add a kitchen island with an attached built-in table.
2. Convert an unused space over the garage into an office or flex room.
3. Finish the basement to add livable square footage.
4. Refinish hardwood floors for a fresh, polished look.
5. Knock down a non-structural wall to create an open floor plan.
6. Upgrade to a steel front door for security and curb appeal.
7. Swap out an outdated garage door with a stylish new one.
8. Replace an old mailbox with a modern or smart design.
9. Paint your home’s interior and exterior in neutral tones.
10. Upgrade an aging HVAC system for better efficiency.
11. Create extra parking if space allows.
12. Build a deck or patio to enhance outdoor living space.
13. Install new siding for a cleaner, updated look.
14. Add a fire pit or outdoor fireplace for cozy gatherings.
15. Enhance your front porch with a screen and seating with decorative touches.
16. Install an outdoor kitchen for entertaining.
17. Consider adding a pool or hot tub, depending on your climate.
18. Invest in energy-efficient appliances and windows.
19. Add smart home features like a thermostat, doorbell camera, or security system.

To learn more, see our post: What Makes Your Property Value Increase? 12 Key Factors to Watch.

What can make a home drop in value?

On the other side of the scale, let’s look at some factors that can cause your home to lose value over time. You’ll see some influencers are on both lists. And again, some are not within your control, but others are.

• Market conditions, such as a downturn in the economy or rising interest rates, can reduce demand for homes and drive prices down.
• Poor location can significantly affect your home’s value. A house in a rough neighborhood or near areas with high crime rates or poor-performing schools can experience slower appreciation.
• Neglecting maintenance can lead to costly issues like a leaky roof or foundation problems, which can lower your home’s value quickly if not addressed.
• Neighborhood changes, like the construction of an unsightly factory, a noisy airport, or a manufacturing plant with undesirable smells can reduce your home’s value.
• Outdated features or lack of upgrades that buyers want can make your home less competitive, especially when compared to newer or renovated homes in the same area.

To learn more, see our post: 12 Things That Can Hurt Your Property Value and Which Ones You Can Fix.

A Top Agent Can Help You Prepare Your Home

A top real estate agent can guide you in selecting the right upgrades and repairs so you can get the highest sale proceeds possible. HomeLight’s data shows that the top 5% of agents sell homes for as much as 10% more.

Step 1: Talk to an Expert

How can you estimate your home’s value?

To get a preliminary estimate of your home’s current value, start by using a free online tool. For example, HomeLight’s Home Value Estimator takes into account key factors like your home’s location, size, nearby recently sold houses (comps), and local market trends to provide you with a ballpark valuation.

You can also consult with a top-rated local real estate agent and request a comparative market analysis (CMA), a detailed report that Realtors put together to help determine a list price.

For a more official value estimate, you can hire a certified appraiser for a pre-listing appraisal. A professional home appraisal typically costs between $300 and $500, though this can vary by location and property size.

To learn more, see our post: 9 Ways To Look Up the Property Value of a House.

How can you estimate your home sale proceeds?

If you are making plans to sell your home, you can estimate your proceeds using HomeLight’s Net Proceeds Calculator. This free tool will factor in your home’s sale price, as well as closing costs, agent commissions, and any outstanding mortgage balance.

To learn more, see our post: How Much Will I Make Selling My House?

Can you use equity to buy before you sell?

To buy a new home before selling your current one, you can ask a lender about a traditional bridge loan or use a modern solution like HomeLight’s Buy Before You Sell program, or BBYS. With BBYS, you can seamlessly unlock the equity in your existing home and use it to make a stronger, non-contingent offer on your new home.

This can be an excellent solution if you’re eager to move but hesitant about juggling two homes at the same time. With an innovative Buy Before You Sell strategy, you have more certainty and avoid having to move twice — no temporary housing and no home sale contingency in your purchase offer. Watch the short video below to learn more.

Hire a top agent to get the highest proceeds

When it comes to maximizing your home’s value, having the right agent by your side can make all the difference. HomeLight’s data shows that the top 5% of agents sell homes for up to 10% more than the average agent, meaning you could potentially earn thousands more from your sale.

Whether you’re looking to sell, buy, or do both, partnering with a top agent can help ensure you get expert guidance and the best possible outcome. If you’re ready to work with an agent who can help you achieve the highest proceeds from your sale, try HomeLight’s Agent Match platform to find the perfect match for your needs.