A Look at Home Price Appreciation and What It Means for Nashville Homeowners
When you hear the phrase home price appreciation, what does it mean to you? chances are you know it has to do with rising home prices. And as a seller, you know rising home prices are good news for your potential sale. But let’s look past the dollar signs and dive deeper into the concept. To truly understand home price appreciation, you need to know how it works and why it matters to you. Investopedia defines appreciation like this:
“Appreciation is an increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates. This is the opposite of depreciation, which is a decrease in value over time.”
When we consider this definition and how it applies to real estate, a few words stick out: supply and demand. In today’s real estate market, we’re experiencing high buyer demand and very few sellers listing their homes for sale
No matter the industry, anytime there’s more demand than supply, prices naturally rise. It happens because buyers are willing to pay more to secure the scarce product or service they’re looking for. That’s exactly what’s happening in today’s real estate market. Buyers are competing with one another to purchase a home, leading to bidding wars that drive prices up. For sellers, the rising prices mean that opportunity is knocking.
According to Quicken Loans, the national average home price appreciation rate is between 3-5% in a typical year. Today, home prices are appreciating well beyond the norm thanks to high demand. The national average is on pace for 11.5% and in and around Nashville, we’re even higher than that, depending on which county you live in.
For sellers, this means that with the current rise in prices, your house may be worth more than you realize. That price appreciation helps give your equity a boost. As you probably know, Equity is the difference between what you owe on the home and its market value based on factors like price appreciation.
Here’s the exciting part: You can use your built-up equity to power a move into your dream home, or you can put it toward life-changing goals like funding an education or opening a business.
But don’t wait. As we saw in 2020, market conditions can change quickly. While price appreciation and interest rates are strong now, those same experts say things may start to change next year. So if you’re selling or refinancing, most likely, you’ll be in a better position to capitalize on the higher-than-average home price appreciation and lower than average rates we’re seeing right now. If you have questions about how do to that, don’t hesitate to reach out to Tara or me. This is Corey Fager with Keller Williams realty….love where you live!