What is the average home value increase per year?

Two men sitting together outside on their stoop, discussing the average home value increase per yearImage: Two men sitting together outside on their stoop, discussing the average home value increase per year

In a Nutshell

Home values tend to rise over time, though the rate can fluctuate and differ from state to state. Over the past year, home values have risen more than 18% across the country.
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Your house is more than a place to live. It’s also a long-term investment.

When you own your home, your monthly mortgage payments help build equity — your home is an asset that can increase in value. Your home equity can also grow through home appreciation, or the increase in the value of your home over time. This can increase your wealth and give you a potential financial reserve.

In this article, we’ll go over the average home value increase per year, what factors influence how fast your home will appreciate, and how home appreciation can help you.



What is home appreciation?

Your home’s value is determined by how much it would sell for on the open market. This value changes over time based on conditions in your local real estate market, as well as the condition of your property and any improvements or additions you’ve made.

Home appreciation refers to the increase in the value of your home over time. When home prices in your area go up, your home value is likely to appreciate as well.

Home appreciation can benefit your home equity. Put simply, home equity is the difference between what you owe on your mortgage and what your home is worth. Your equity builds through your monthly payments as you slowly pay down your loan. But it can also grow through home appreciation. As the value of your home increases, the amount of equity you have increases right along with it.

While home values tend to rise over time, home appreciation is not guaranteed. The value of your home may fall in any given period — called depreciation. When home values fall, you may have less equity than you had before. This can cause problems if you go to sell or refinance your mortgage. You may have a harder time paying off your current mortgage if your home is worth less.

What is the average house price increase per year?

Home prices have increased significantly in recent years. Between April 2021 and April 2022, home values nationally rose 18.8%, according to the Federal Housing Finance Agency.

That is higher than historical averages. Since 1991, the average annual home price increase has been 4.3%, according to the FHFA. Since 2000, the average rate has been 4.7%. And since 2012, the average rate has been 7.7%.

Home price appreciation can also vary significantly from state to state. In the first quarter of 2022, home values in Florida were up more than nearly 30% compared to the year before, according to the FHFA State House Price Indexes, the fastest rise of any state. In the state with the slowest home appreciation, North Dakota, values were up about 10%.

Between 1940 and 2000, the average home value quadrupled even when adjusted for inflation. Home values increased in each decade during that period, with a high of 43% in the 1970s and a low of 8% in the 1980s. Home values fell between 2007 and 2010, during the Great Recession.

What factors affect home appreciation?

The home appreciation rates discussed above are just averages, covering many homes. The actual home value increase you’ll experience will depend on a number of other factors, in addition to the broader real estate market trends reflected in the national and state averages. These can include the following:

  • Location — Your home may be located in a desirable neighborhood or school district, or on a waterfront, or close to major employment center. The location of the property may help your home appreciate faster than homes in a less-popular district.
  • Supply and demand — If there is high demand for homes near you, but few available for sale, homes can appreciate quickly.
  • Age and condition of the home — Older homes may appreciate more slowly or actually depreciate because potential buyers fear that significant work is needed.
  • Upgrades and updates — Homes that have been updated, renovated or simply well-maintained tend to appreciate faster than homes that haven’t had any improvements. Homes without proper upkeep and upgrades may be discounted compared with the overall market, or even depreciate in value.
  • Real estate comparables — One of the main ways to determine a home’s value is to look at the sales prices of comparable homes. Comparable homes generally are of similar size, location, style and age. If homes similar to yours are selling for higher prices, your home will likely have appreciated in value.

Can you add value to a home?

You don’t have to simply wait for your home to appreciate on its own. You can add value to your home by completing remodeling and improvement projects. A minor mid-range kitchen remodel, for example, can add more than $20,000 in value to your home, according to the 2022 Remodeling Cost vs. Value report. Relacing an asphalt shingle roof can increase your home value by nearly $19,000.

But keep in mind that the full amount you spend on the home improvements will not be reflected in additional value. Typically, only a percentage of the project cost winds up as added value to your home. Be sure that you’re completing the improvement because you want to enjoy it, not simply to boost your home value.


How home appreciation can help you

Home appreciation helps to increase the equity in your home, often much faster than you’ll build equity through your monthly mortgage payments. If you have enough home equity built up, you can borrow against this value to pay for things like home improvements, debt consolidation or unexpected expenses.

A home equity loan uses the equity in your home as collateral, and allows you to borrow a lump sum of money that you pay back in equal payments over a period of years. They’re often referred to as second mortgages.

You may also apply for a home equity line of credit, or HELOC. These function more like a credit card. HELOC lenders give you a set limit, and you can draw on your account as many times as you need as long as you stay under that amount. At the end of your draw period, you pay back the amount you borrowed plus interest.

But if you fail to make your payments on either a home equity loan or HELOC, you could lose your home to foreclosure.

*© 2022 Zonda Media, a Delaware Corporation. Complete data from the Remodeling 2022 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.


About the author: Andrew Dunn is a veteran journalist with more than a decade of experience as a reporter and editor at North Carolina news organizations, including the Charlotte Observer and the StarNews in Wilmington. In those roles,… Read more.