How to find housing appreciation data for your area
One of the financial benefits of homeownership is the effect of putting a relatively small amount of money down (20% usually) but reaping all of the rewards of home appreciation. Of course, homes depreciate as well. In fact, some homes are still below their 2007 values ten years later. Home appreciation is very much dependent on local market dynamics.
Why does home appreciation matter?
Any amount that your home appreciates contributes to your home equity, meaning, the money that is yours to keep when the house is sold. It’s your profit, minus home sale closing costs.
Remember, your home equity equals the value your home is worth minus what you owe on it.
So, the more your home appreciates, the more money you have in home equity as part of your net worth.
What drives home appreciation?
Home appreciation is based on local market dynamics. You really can’t compare home appreciation in different areas because so many things contribute to an area appreciating, most importantly, how desirable the location is. As with any asset, supply and demand are the big drivers of value. How much a home changes in value over time is it’s appreciation.
Home appreciation rate is hyperlocal
Your uncle in Wisconsin may see his home appreciate 1% a year while your Seattle condo appreciates 5% a year. But, appreciation doesn’t just differ on a state by state basis or city by city basis but a street by street basis in some cases!
Appreciation depends on property type
And, not only is appreciation hyperlocal, but it also is very dependent on the type of property that you have. Multi-million dollar homes have a different customer than studio apartments, for example, and the rates of appreciation are different.
Often, you’ll hear about one end of the market going “soft” but not the other. Different properties attract people with different needs so supply and demand are not the same.
How to tell what your home appreciation is?
Do you love data? I love data. Let’s find housing appreciation data for you.
Because home sale data is public, there are many sources of historical home sale data. But, many of them are in large spreadsheets and difficult to sort through. And, because you really need to search hyperlocal area plus property type, you need to have tools to filter the data to what is similar to your property.
I recommend you use Redfin to do this analysis. I’ll list many other sources of data below, but Redfin compiles house sale data in a way that you can zoom in on specific areas and also filter by property types.
Using Redfin to look at hyperlocal, similar property appreciation
1. Go to www.redfin.com
2. Put in a zip code in the search box. This will pull up the map view.
3. Zoom into the map area on the left that has houses similar to yours in terms of value.
4. Select “More Filters” from the right side, and select features that describe your property. such as range of bedrooms, bathrooms, etc.
5. Toggle “Listing Status” from For Sale to Sold
6. Scroll down and select “Download All”.
This will give you a downloadable spreadsheet. With it, you can:
1. Delete rows that have outliers, houses that don’t seem to correspond to yours, like multi-family, etc.
2. Sort by year of sale
3. Take the average home sale price
4. Determine the percentage increase year over year
Limitations
Redfin only lets you download up to three years of data. You can look at longer term data on their excellent Data Center page, but it won’t be hyperlocal or specific to your housing type.
Also, I noticed that some areas do not have year of sale data when you download it from their site. Some areas have partial data. Some have full data. This is because the individual MLS systems in local areas determine the data available.
Other sources
Here are some other data sources you can check out:
The National Association of Realtors
Do you want to learn more about how to make your home a financial success, no matter what the appreciation is in your area? Read about our new book: Avoid the Money Pit, Turn Your Home Into A Financial Powerhouse. It’s available now in both digital and print copies and takes you through everything you need to know about making your home a financial success in the short and long term, without getting taken advantage of.
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Reference to http://www.redfin.com is totally bogus. Upon entering address and zip it would only offer to speak to a broker!
Hi Ron, I just tried it and it works as described in the article. But, I tried it for Brooklyn (my area) which returns a lot of results due to density and volume of homes, so maybe they are only offering search for certain zip codes? Hmm. It certainly is frustrating if there are just sending you to a broker. We will do some sleuthing and see if we can come up with an answer or an alternate method for you to use. In the meantime, there’s another data source outlined in this more recent article: https://www.homeownering.com/blog/2019/08/09/what-is-the-average-house-appreciation-rate/ from the Federal Housing Finance Agency, the Housing Price Calculator, that might return useful values for your neighborhood: https://www.fhfa.gov/DataTools/Tools/Pages/HPI-Calculator.aspx.