How Home Appreciation Works For You

Dated: December 8 2021

Views: 156

To better understand home price appreciation and how it works, let’s take a deeper dive into the concept. Investopedia defines appreciation like this: 

“Appreciation, in general terms, is an increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates.” Image title

 Applying this definition to real estate, a few words stick out: supply and demand. In today’s market we’re experiencing a higher buyer demand and very few sellers listing their homes for sale as you can see below: 

Regardless of the industry, when there is more demand than supply, prices naturally rise. In today’s real estate market, this is exactly what’s happening. Buyers are competing with other buyers to purchase a home, which leads to bidding wars driving the prices up. As for sellers, the rising prices mean that opportunity is knocking. 

Quicken Loans tells us the national average home price appreciation rate is between 3-5% in a typical year. Nowadays, home prices are appreciating well beyond the norm due to high demand. The chart below shows the latest expert projections for home price appreciation rates for this year: 

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 As a seller, the normal 3-5% appreciation rate per year versus the current average forecast of nearly 11.5% is very significant! Your house could be worth more than you realize as the increased appreciation gives your home equity a boost. Your home equity, the difference between what you owe on your home and its current market value, is based on factors like price appreciation: 

There are many ways to benefit from your built-up equity: moving into your dream home, funding an education, opening a business, or even getting that second home.Just don’t wait - price appreciation is strong now, but those same experts predict a more normalized appreciation pace next year. Listing your house sooner rather than later will put you in the best position to capitalize on the higher home prices we’re seeing today. 

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Bottom Line 

Thinking of selling your house? There really is no time like the present!

Contact Jenifer with Keller Williams Realty in Lubbock to get an expert market analysis of your home and its potential.

Blog author image

Jenifer Hudman

As a Realtor, my first priority is to make my clients happy. I listen to my clients wants and needs to achieve the best outcome in every transaction and I strive to ensure that the home buying or sell....

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