Two of the biggest purchases we tend to make are both considered assets: homes and cars. The difference? Homes will tend to appreciate in value over time, while cars heavily depreciate in value during the same period. Today, we look at home appreciation, what to normally expect, and why this current period is incredible for sellers!
Average Appreciation – Standard and Not So Poor
For starters, home appreciation generally occurs at a yearly rate between 3 and 4 percent. This is usually higher than the rate of inflation; because of this, homeowning has long been considered one of the best ways to build wealth over time. This is great! Even in average years, homeowning is a great tool. Financial experts love to talk about this. They know how effective it is! While your home value appreciates over time, your actual mortgage payments do not. This is because unlike rental properties, the contract you sign is for a fixed price over a long-term period. You can see how this is a valuable concept.
Today’s Appreciation – Not So Standard, Very Rich
However, today’s market is a whole different ballgame. A variety of factors have contributed to the faster than ever appreciation rates and asking prices; these factors include lower inventory of available homes, higher demand, and competition with wealthy buyers looking to convert homes into rental properties. All of these factors contribute to greater than average appreciation; in many cases, homes are selling more than their asking price, which already has seen higher than average numbers! 6 in 10 homes are doing this, which is unheard of.
Why it Matters
As a seller, you are in the best position to find success in the current market. Not only are homes selling faster than they have before, but the values of these homes are so high that your returns may exceed what your home is listed for. This is truly a seller’s market for the foreseeable future. In a seller’s market, there are endless opportunities for reaping the rewards of selling your home. Knowing that prices are the highest they have been in decades is sure to light the fire in your eyes!
Conclusion
Finally, you have gotten a glimpse into how appreciation can benefit you as a seller. A standard year will see your home value rise anywhere from 3 to 4 percent. On the other hand, the current market has seen home prices skyrocket 10, 20, or 50 percent – sometimes even higher! The idea is that owning a home is a great way to build wealth, and in the current market, there has never been a better time to sell. If you liked this, check out some air conditioning tips and tricks to stay cool during this hot week.