SVP, National Sales Manager-Mortgage Banking

For most homeowners, selecting a house constitutes the most significant financial commitment they will undertake. While the allure of choosing a future property based on its layout, wall colors, and an array of features is strong, don’t forget to also assess it as an investment.

The home-buying choices you make today could result in a difference of hundreds of thousands of dollars when you sell, whether that's five years or a decade down the line.

Figuring out how much your house will be worth 10 years from now is not an exact science. As the 2020 pandemic and consequential housing market explosiveness proved, there will always be unforeseen external forces that influence housing supply and demand. However, there are steps you can take to forecast your home’s worth, especially in comparison to other properties.

Calculating Your Home’s Future Worth: The Basics

How future home value is calculated is Home value x (1 + Annual Rate) x years. However, finding an “annual rate” that directly reflects the upcoming 10 years is near impossible. Therefore, when conducting this calculation, approach it as a loose estimation at best.

So, how do you find the annual rate? While past years assumed that home value grew roughly 4-5% year-over-year, the events of the past few years have caused such numbers to soar to at least 20%. And, by looking at 2023 vs. 2022, home prices actually experienced a decrease in average value, further demonstrating the volatility.

Our best advice? Find the property appreciation rate for your home’s specific location when calculating your home’s worth 10 years from now. After all, as noted by Redfin, homes in New York saw a -4.1% decline YoY yet certain communities, such as Bronxville, NY, saw 63.9% growth.

Research Localized Demand

Investigate City and Statewide Data to Find the Home Appreciation rate

Tools like Redfin let you view market data by zip code, city, state, etc. This not only lets you see how this year is performing compared to last year’s but also how home values are trending over time.

While these insights are valuable, don’t blindly assume that future years will see the gains (or losses) shown by past years. There are many factors that can cause local or national trends to slow or reverse.

Consider Neighborhood Investments for Present and Future

Common sense highlights that the neighborhood itself can help or hurt a property’s value. Therefore, to get a better sense of what a home could be worth in 10 years, investigate what efforts the community is making to improve the surrounding area. Examples include:

• New bus lines
• New opening customer-serving businesses
• New properties being built, drawing more attention and foot traffic to the community
• New or improved parks
• Larger employers establishing offices nearby
• Increased budget for maintenance, public safety, etc.

Other indicators of your home’s perceived worth 10 years from now include crime data (and which direction it trends), public school ratings, and whether or not it's in a flood zone.

Consider if More People are Coming and Going

There are plenty of resources available online that tell you about the population trends of your area. If you see a steady trend of households increasing, you can bet that this trend will continue unless a major event interrupts the momentum. Conversely, if more people leave the community than join, you should expect your home’s appreciation to slow.

Understand If You’re Paying a Fair Rate Today

If you watched the news over the last few years, you no doubt heard stories of new home buyers overpaying for properties when confronted with shockingly limited supply. In turn, they may not see quite the same ROI when selling in 10 years as someone who bought their home for a price more on par with others in the neighborhood.

Therefore, when calculating your home’s worth 10 years from now, it’s important to not only factor in your house’s price but also those surrounding you.

You Partially Sway the House’s Value in 10 Years

Don’t forget to factor in your own future actions when calculating how much your house could be worth in 10 years. However, it’s not just about the amount of money you spend on the house, but also how you choose to spend it.

Considerations include:

• Will you renovate based on ROI or personal need – The perceived ROI home renovations are surprisingly varied, with almost none being estimated at 100%. On the higher end? Adding a deck, updating fixtures, replacing doors and windows, and refinishing hardwood floors. Much lower on the spectrum? Adding a sunroom or swimming pool.

• Will you make widely accepted home modifications or individualized choices – The statement beauty is in the eye of the beholder is quite applicable to home renovations. Certain renovations could actually decrease the number of interested future buyers and the house’s subsequent worth 10 years from now. For example, let’s say you decide to remove the grassy lawn in favor of a rock garden; while it may bring you endless joy, prospective buyers may have a very different take. None of this should stop you from making home changes that satisfy yourself rather than strangers, but just be mindful of the potential financial impact.

• Will you embrace home trends and societal shifts – What buyers value in homes shifts as our world shifts. Case in point, the rise of remote work led to an increased demand for home offices and overall greater space. Eco-consciousness and increasingly severe heat waves are causing home buyers to place greater value on energy efficiency. Making property updates that align with the demands of the market could further boost your home’s value in 10 years.

• Will you take care of the property – Diligent home maintenance not only ensures a comfortable living environment but also plays a pivotal role in bolstering your property's long-term value. Regular upkeep and repairs prevent small issues from escalating into costly problems, safeguarding your investment from depreciation. By demonstrating a well-maintained home, you instill confidence in potential buyers and position your property as a desirable and enduring asset in the real estate market.

To summarize, putting $50,000 into your home won’t guarantee it will be worth $50,000 more in 10 years. Strategically allocating the money and keeping your finger on the pulse of shifting consumer demands can go a long way to increasing your property’s value.

Make Informed Decisions When Handling Your Home and Finance

The decisions you make regarding your choice of house and financing can wield a profound influence over your daily savings and financial flexibility. After all, you have to factor in your mortgage payments, taxes, utilities, maintenance fees . . . the list goes on. To confidently navigate the rocky waters of purchasing a home, consider the below articles from Bank of Hope.

Getting a New Mortgage Before Selling a House - The transition of buying a new house while selling your previous home can be quite the financial juggling act. This article breaks down your various options and provides tips on how to make the progression from one mortgage to the next as smooth as possible.

Getting Loans for Rental Property Business - Homeowners aren’t the only ones wondering about a property’s worth 10 years from now. Those interested in purchasing investment properties can learn about different types of loans that may work for their financial goals and business model.  

The “What”, “Why” and “Who” in the Cost of a Home Mortgage - New to acquiring a mortgage? This guide will get you started by explaining some of the basics.

Interested in getting started on financing a new home? The Bank of Hope team can answer all questions and walk you through the steps of getting a mortgage. To learn more about our services, visit our Mortgages pages.