# Home Appreciation Calculator

This value should be greater than or equal to 5000
In years your home will be worth

## How Do You Calculate Home Appreciation

To calculate how much a home has appreciated in value over time, you need to use the future value formula. This formula is highlited below:

### Home Appreciation Formula: FV = P * (1 + i)ⁿ

• FV is the future value of the home (this is what you are working out)
• P is the current value of the home
• i is the annual interest rate
• n is the number of years

It is worth pointing out that the calculators on most smart phones can easily accommodate the formula outlined above.

### Home Appreciation Formula Example

For this example, we are going to use a property with a current value of \$300,000 an appreciation rate of 5% and a timeline of 10 years.

• P = \$300,000
• i = 5% (expressed as 0.05 when using the formula)
• n = 10

Now we just have to enter these values into the home appreciation formula, FV = P * (1 + i)ⁿ , as you can see below.

FV = \$300,000 * (1 + 0.05)10

FV = \$488,668.39

As you can see from the example above, you can workout the future value of your home on your Smartphone if you know what the formula is. It only requires 3 variables:

1. The present value of the home
2. The home appreciation rate
3. The time period, expressed in years

## Home Appreciation Calculator FAQ

Home appreciation rate is the rate at which a property increases or decreases in value over time. Mathematically, home appreciation rate it is the same as all other forms of appreciation, where the final value of an asset changes, based on the interest rate.

In favorable market conditions, property prices tend to increase year-on-year, which can lead to significant home equity gains for property investors. This is called a positive home appreciation rate. However, it is also true that the market will experience downturns, during which time your home price may decrease in value. This is called a negative home appreciation rate.

The 2008 Global financial crisis is one such example of negative home appreciation rates, and today’s housing market is still affected by the long-term repercussions of this housing market crash.

Ultimately, home appreciation is simply the rate at which your home value increases or decreases over time. It is a fluctuating interest rate which can help you determine what your home price is likely to be in the future, be it over a short term or long-term horizon. When taking a long-term perspective, the average property value in the US tends to increase in value over time, despite inevitable downturns that may occur during certain decades.

This depends on whether or not you sell the property. If you hold the property, the appreciation is not taxed. However, if you sell the property, you are liable for capital gains tax, provided the market value of the property has increased in value over time.

With that being said, there are significant measures in place to reduce the capital gain tax you are liable to pay if you sell your primary residence. To be more specific, you can exclude up to \$250,000 in capital gains when you sell your house. This can be extended to \$500,000 if you file a joint tax return with your spouse.

Furthermore, you are also able to offset the amount of tax you pay with rental property specifically, if you exercise your right to deduct depreciation as an expense. This can have a big impact on the cash flow and profitability of a real estate investment property, by reducing the amount of taxable income that you are liable to pay the IRS.

With that being said, if you sell a rental property, the tax implications are a bit more complex, because you need to factor in the capital gains tax and property depreciation and your personal tax rate to work out the final amount that you need to pay. If this applies to you, it would be best to research this topic further or consult a professional tax advisor to ensure you file your tax return correctly.

This is a subjective question that will depend on the individual real estate investor. Generally speaking, the higher the appreciation rate the better.

In America, home appreciation rates range from 2-6% when looking at the real estate market over a period of 10 years or longer. As mentioned earlier, the global financial crises caused the real estate bubble to crash, but the market has recovered very well since then.

Ultimately, you could say that 2% and above is a respectable annual appreciation rate, and that the higher the number, the better it is for the property investor. Obviously there are lots of real estate investors that will be aiming for returns that are greater than 2% annually. It all depends on your goals as an investor.

For instance, fix and flip investors aim for a net profit of 10% or higher. However, they are able to increase their ROI by completing renovations that are known to increase the value of a home. They also have various techniques for finding properties that can be purchase for below market value.

Traditional rental property investors are often more focused on the cash flow status of the property, over and above the appreciation rate. Again, it all comes down to the individual goals of the investor.

There are few ways to work out the real estate appreciation rate in your area.

The first option is to simply research the average appreciation rate in your area.

The next option is to consult popular listing websites like Zillow, NeighborhoodScout , and Trulia . Each of these websites can help you determine the home appreciation rates in your area.

The third option is to view the last known sale price of similar properties in the area with New Silver’s ARV Calculator. This is an easy and free way to workout housing prices based on sales history.

Lastly, consulting a reputable realtor or real estate agent in your area is also a good option. A realtor can help assess the fair market value of your property in its current condition, and provide a reliable estimate of the annual appreciate rate in your suburb. Real estate investors can call upon any one of these methods.

Appraised Value:

When calculating how much a home is worth, the appraised value is generally the most accurate estimate of the potential sales price that you are likely to find. This is because professional appraisers will review the last known purchase price of comparable properties (comps) in the area and physically inspect the house.

Reviewing the comps and inspecting the property allows the appraiser to form a reliable estimate of the home’s value, so much so that banks and other lenders can use the appraised value when establishing the loan value that they are willing to offer a borrower.

Estimated Home Value:

The estimated value of a home is similar to the appraised value, but it isn’t necessarily as accurate.

For this, you can use an ARV Calculator or a tried and trusted home value estimator. Both of these methods also rely on finding the last known sales price of comparable properties in the area.

Importantly, you don’t to physically inspect the property and you don’t need to be a professional appraiser in order to estimate home value.

## Additional Real Estate Calculators & Resources

### Rental Property Calculator

Workout the potential profitability of an investment property with our Rental Property Calculator.

### Hard Money Calculator

To figure out the ROI of a fix and flip, you need a comprehensive Hard Money Calculator. It allows you to workout the monthly repayments, analyze net operating income, calculate the return on investment when you sell the property.

### BRRRR Calculator

Each step in the Buy, Rehab, Rent, Refinance, Repeat (BRRRR) requires detailed analysis before you proceed with the deal. Fortunately our BRRRR Calculator breaks the process down into simple phases that are pretty easy to understand.

### ARV Calculator

Quickly assess the After-Repair Value of a property with our user friendly ARV Calculator.

### Cap Rate Calculator

Cap Rate is a simple formula that helps investors work out how profitable an investment property is likely to be. Our Capitalization Rate Calculator makes this easy to do, in very little time.

### FlipScout

FlipScout is a free search engine for property flippers. It lets you find properties that you can earn the highest return on when completing a fix and flip or fix-to-rent project. You can learn more about FlipScout here.

### House Flipping Calculator

Quickly calculate the Net Profit, ROI and Return on Equity when flipping a house. This house flipping calculator makes it easy to see how profitability is impacted by the loan amount, interest rate and turnaround time.

## Where We Lend

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