Homeowners who plan on moving at some point in the future are likely to ask the question: “What will my home be worth?” Ah, if only there was a real estate magic eight ball that could reveal the price tag sellers should slap on their homes! Location and real estate market conditions help determine your home’s value, but unfortunately, pinpointing an exact number is far from a perfect science.
But there are certain tried and true tactics you can employ to help you get a ballpark figure for your home’s worth. Below, our real estate experts offer their most reliable methods.
‘What will my home be worth?’
Projecting out what your home will be worth in just a couple of years can be challenging, but in a conservative market, 3% appreciation per year is a good guideline to use, says Liane Jamason, broker associate at Smith & Associates Real Estate, in Tampa Bay, FL.
So, using that number, you can estimate that a $200,000 home you bought today could be worth $268,783 in 10 years. Of course, keep in mind that exceptions abound. In some markets, you can see jumps in value of 15% to 20% over short periods of time.
Look back to look forward
Another way to estimate your home’s value is by taking a backward, historical look, says Bruce Ailion, a real estate agent and attorney for Re/Max Town and Country in Atlanta.
The Federal Housing Finance Agency’s Housing Price Index Calculator, for example, will show you market trends from the past that you can use to help you plan for the future. For example, the calculator shows that a home purchased 20 years ago for $100,000 in Portland, OR, would be worth $252,335 today, meaning that it had increased 4.74% annually, for a total of 153.34%. Taking that same percentage and pushing it out 20 years, you could guess that your home might be worth $636,640 in 20 years.
Jason Walgrave with Re/Max Advantage Plus in Minneapolis/St. Paul, MN, likes to look at the even longer term. “The Twin Cities housing market has appreciated an average of 4.2% per year over the last 40 years, so under that model, a $250,000 house today may be valued at $300,000 in five years, $350,000 in 10 years, and $450,000 in 20 years.”
Keep in mind however, that these scenarios don’t take into account the specific circumstances of a neighborhood, the home’s condition, or city revitalizations that would drive up the cost of housing.
The most accurate way to answer the question “What will my home be worth?” is to work with your real estate agent. This can help you get a handle on the comps—or comparable properties—in your neighborhood that will help give you an accurate read on how much your home could sell for. If you looked at nine homes in a given subdivision that sold for $100,000 in 2006 and were selling in the $140,000 range in 2016, you could say that real estate in that area was appreciating by 40% every 10 years.
The bottom line is that the longer you stay in a home, the more time you have to reap the benefits of real estate appreciation.
Any real estate expert will tell you that if you are planning to move, it’s wise to keep yourself in the know about your property’s value. That way, you won’t be surprised when the time comes to put your home on the market.