# Determining the APPRECIATION RATE

How do you determine the appreciation rate for an area? If you were to purchase a house today, could you, would you know what %age rate of appreciation the value of the house would be in 2, 5, 10 years?

Market indicators will tell you where the market is going; like increasing/decreasing population, mortgage rates, businesses, jobs, an expanding local economy, etc. BUT, all the time I hear people throwing out percentages. I’m always asking myself, “WTH did you get that number?” I’ve tried researching online but, I haven’t found anything yet.

Is there a math equation? Do you compare average prices for sold properties from this year to last year and the year before?
I’ve asked this question so many times now, and none of the answers given to me can explain how investors so often declare with certainty that an area appreciated 5% or is -2%.

Writing out that post sort of helped me answer my own question.

I don’t think anyone would know what %age rate of appreciation the value of a house will be 2, 5, or 10 years ahead. Market indicators tell you if there’s a good chance your house will appreciate in value BUT, you won’t know by what %age the value of your house has appreciated until you get there.

Does that make sense?

Makes sense to me.

Your local Board of Realtors should have sales price info. online. They track appreciation and depreciation rates so they can advise their customers.

Furnishedowner

You’ve missed the obvious: Tarot cards.

Now, the serious answer. Buy and hold is a long term investment. Real estate cycles up and down. If you are a buy and hold investor, you wait until the market is in a good upcycle before you sell.

Two things you can absolutely count on: 1- Real estate goes up over time. Maybe over a long time, and in a few blighted areas, it’s only going up with inflation, but mostly, as the population grows, the value of real estate goes up. 2- Real estate prices are going to cycle. They go up and down. Guaranteed.

You don’t have an easy way of knowing what the appreiation rate s goin to be on any house, only what it has been or currently is.

However, you could make LONG-TERM projections based on a conservative 3% appreciation per year. If the deal makes sense, go with it and any more than that is a bonus. Frankly, though, I wouldn’t bother worrying about appreciation too much if you’re buying in your own city.

If you’re open to invsting in places away from your state but that expect a lot of appreciation then I think it matters more.