June is National Homeownership Appreciation Month! To celebrate this month for all homeowners and future homeowners, we will outline the appreciation you could potentially earn when you own a home. To speak to a team member, contact us today!
What Is Home Appreciation?
Appreciation refers to the increase in value over time. In the case of real estate, it is the value of a property that increases over time. When buying or building a home, there is a possibility that the value of the home may increase, and you can profit from the home in the future! The value may increase with home improvement projects, inflation, a growing neighborhood, etc. By increasing the property value, the home equity is also increasing if you have a mortgage.
How Is Appreciation Calculated?
If you want to calculate appreciation as a percentage, you must know the market value today and the original value of the home. You then divide the change in value by the initial value and multiply by one hundred.
For example, let us say your home was worth $200,000 at the time you bought it and it is now worth $300,000. First, you would subtract $200,000 from $300,000 to get a dollar amount of $100,000. To get the percentage, you would divide the $100,000 into the initial value of $200,000 to get 0.5. Finally, you multiply 0.5 by 100 to get the percent of 50%. Therefore, the property value of this home was appreciated by 50%.
To avoid doing the calculations yourself, you can use this U.S. Federal Housing Finance Agency’s Calculator.
Note: The national average appreciation rate is between 3-5%.
How To Increase Home’s Value
The property, the area, and inflation can all make the value of your property increase without you doing anything. However, there are some other ways you can assure the value of your home increases:
Add a Deck
Adding a deck may be the single most overlooked way to increase your home’s property value. A deck not only adds another appeal to the outdoor area of the home, but it directly increases the square footage of the home without having to pay for extra room extensions. Pick durable materials and hire a contractor to complete the project!
Update the Kitchen
The kitchen is the selling point for many buyers. This is usually one of the first rooms people see when walking into a home, and it is a place where people know they will spend a lot of time. Whether buyers want a good kitchen for cooking meals, for family or entertaining many, the power of an updated kitchen should never be overlooked. Update the appliances with modern, but not too fancy, appliances with smart technology. Make the kitchen a neutral and open place, with only small bold design ideas. These minor changes go a long way.
Finish the Basement or Attic
This is obvious. These two areas add a whole extra floor to the house; this is a major selling point. You do not need to do anything crazy or expensive. Just finish the floors and walls and that will benefit you a substantial amount.
Energy and Modern Technologies
This is up to your discretion. These selling points will surely increase the property value of the home, but it also takes an investment to complete these updates. Install modern technologies in your home such as smart thermostats, lighting, or locks. More homeowners are looking for modern homes with these modern technologies. In addition, energy efficiency is a major selling point. Decide what you want to focus on, from energy efficient windows to lighting, and make it come to life!
Overall, investing in real estate can be profitable. It is important that you understand what affects appreciation and how to invest in lucrative properties. Happy National Homeownership Month! To learn more about home buying, check out our free course!