How Much Has Your Home’s Value Increased?
A Look at Home Prices Over the Past 5 Years

Over the past few years, you’ve probably seen countless headlines about skyrocketing home prices. But have you ever stopped to consider what that actually means for your home’s value?

Home prices have risen dramatically over the past five years—far more than usual. And if selling has been on your mind, this could mean a bigger-than-expected payday when you list. So, how much has your home’s value really changed? Let’s break it down.

The Rapid Rise in Home Values

Typically, home prices increase by about 2-5% per year. But between 2021 and 2022, home values saw double-digit jumps, with some areas experiencing price increases of over 20% annually. Why? There were far more buyers than available homes, sending prices soaring.

While things have since stabilized, homeowners still benefit from these substantial gains. If you’ve owned your home for at least five years, your property has likely gained significant value, translating to increased equity and financial opportunity.

The latest data from the Federal Housing Finance Agency (FHFA) confirms that, nationally, home prices have risen by nearly 60% in just the past five years. Here’s a closer look at how different states have fared.

Home Price Growth by State

According to the FHFA’s Q4 2024 report, home price appreciation varies by state. Some areas saw even more remarkable growth, with appreciation exceeding 70%. Let’s take a look at some of the states with the highest home price appreciation:

• Maine: 78.5% increase

• New Hampshire: 75.1% increase

• Florida: 74.8% increase

• Vermont: 74.6% increase

• Rhode Island: 71.2% increase

Meanwhile, Arizona saw an impressive 66.2% increase, reflecting its popularity among homebuyers seeking sunny weather and strong investment opportunities. Even states with more moderate appreciation rates still experienced significant growth.

What This Means for Homeowners

If you’ve been holding off on selling due to concerns about today’s mortgage rates and home prices, now is the time to reconsider. The equity built up in your home over the past five years could bridge the affordability gap and make your next move more achievable.

And if you’ve owned your home for longer than five years, your appreciation is even higher. You’re stacking these last five years of rapid growth on top of years of steady appreciation. That could mean a much larger payout when you sell.

How to Determine Your Home’s Current Value

While knowing your state’s appreciation rate is helpful, it doesn’t give you a personalized estimate of your home’s value. Local market conditions, home improvements, and supply and demand all play crucial roles in determining what your house is worth today.

That’s where working with a local real estate expert comes in. A real estate agent can:

• Analyze recent sales in your neighborhood

• Assess how your home compares to others on the market

• Consider upgrades or renovations that add extra value

• Provide a competitive pricing strategy if you’re thinking of selling

The Impact of Rising Home Prices on Homeowners

The dramatic rise in home prices over the last five years has had a significant impact on homeowners, particularly those who purchased before the surge. If you bought your home prior to 2020, chances are you have built up substantial equity. This increase in equity provides homeowners with more financial flexibility, whether they choose to sell, refinance, or invest in home improvements.

Equity Gains and What They Mean for You

Home equity is the difference between your home's current market value and the amount you owe on your mortgage. With home prices appreciating by nearly 60% on average over the past five years, homeowners in many areas have seen their equity skyrocket.

For example, if you purchased a home for $300,000 five years ago and prices in your state have risen by 60%, your home could now be worth around $480,000. If you still owe $200,000 on your mortgage, you now have approximately $280,000 in equity.

This newfound equity opens up several opportunities:

• Selling for a Profit: If you’ve been thinking about upgrading or relocating, now may be the perfect time to cash in on your home's value.

• Refinancing Options: Homeowners who secured a lower mortgage rate before rates increased may be able to tap into their equity through a home equity loan or line of credit.

• Investment Potential: Many homeowners use their home equity to invest in additional real estate or other financial ventures.

The Effect on Move-Up Buyers

If you're looking to buy a larger home or move to a more desirable location, the rise in home values can work in your favor. With increased equity, you may have a larger down payment available for your next purchase, making it easier to qualify for a loan despite higher interest rates.

However, it’s important to work with a real estate professional to assess the local market conditions. While home prices have surged, interest rates have also fluctuated, affecting affordability. A real estate expert can help you determine the best timing for your next move.

How Home Prices Affect First-Time Buyers

While rising home prices benefit existing homeowners, they pose challenges for first-time buyers. Affordability has become a key concern as home prices continue to outpace wage growth in many areas. Here’s how these rising costs impact new buyers:

• Higher Down Payments: With home prices increasing significantly, first-time buyers now need to save more for a down payment. In high-growth states like Arizona, where home prices have jumped by over 66% in five years, the upfront cost of homeownership is significantly higher than it was in 2019.

• Increased Mortgage Costs: Even with lower interest rates in the past, buyers today must finance a much larger loan amount than they would have five years ago. This leads to higher monthly payments, requiring buyers to adjust their budgets.

• Competitive Market Conditions: In areas with limited housing inventory, competition remains fierce. Multiple-offer scenarios are common, meaning buyers need to be prepared to act quickly and make competitive offers.
  
  

Regional Variations in Home Price Growth

While the national average for home price appreciation is 57.1%, the rate of increase varies widely by state. Some states, like Arizona and Idaho, have experienced price jumps exceeding 65%, while others, such as North Dakota, have seen more modest growth.

Top States for Home Price Appreciation Over 5 Years

• Maine (78.5%) – Leading the nation with nearly 80% appreciation, Maine’s market has seen strong demand, particularly in rural and coastal areas.

• Florida (74.8%) – Driven by population growth and demand for vacation properties, Florida’s market has boomed.

• New Hampshire (75.1%) – The Northeast has seen significant appreciation, with New Hampshire standing out as a top performer.

• Arizona (66.2%) – A combination of strong in-migration, a booming job market, and a desirable climate has fueled Arizona’s rapid home price growth.

States with More Modest Growth

• North Dakota (35%) – Unlike many states, North Dakota has experienced slower appreciation due to a more stable housing market.

• Washington D.C. (12.6%) – The smallest increase in the nation, D.C.’s market has seen more modest price growth compared to surrounding states.

Understanding these regional differences is crucial for both buyers and sellers. If you’re planning to relocate, researching appreciation trends in your target market can help you make informed decisions.

Is Now a Good Time to Sell?

Given the significant rise in home prices, many homeowners are wondering if now is the right time to sell. While market conditions vary by location, several factors suggest that selling in today’s market can be a smart financial move:

1. High Home Values: Many homeowners are sitting on record amounts of equity, allowing them to sell at a premium.

2. Strong Buyer Demand: Despite rising interest rates, buyer demand remains steady, particularly in desirable areas.

3. Limited Inventory: Housing supply is still relatively low, which means sellers may receive multiple offers and favorable terms.

4. Seasonal Advantage: Spring and summer are historically the best times to sell, as more buyers enter the market.

If you’ve been considering selling, consulting with a real estate agent can help you evaluate your home’s market value and determine the best strategy to maximize your profit.

Future Outlook: What’s Next for Home Prices?

While home prices have increased significantly over the past five years, many experts predict that appreciation will moderate in the coming years. The Federal Housing Finance Agency (FHFA) and other housing market analysts suggest that while prices may continue to rise, the pace will likely slow.

Key Factors Influencing Future Home Prices:

• Interest Rates: Mortgage rates play a major role in affordability. If rates decrease, demand could increase, pushing prices higher.

• Inventory Levels: A rise in housing supply could help balance the market and slow price growth.

• Economic Conditions: Job growth, inflation, and wage trends all impact housing affordability and demand.

For homeowners and buyers alike, staying informed about market trends is essential. Working with a knowledgeable real estate professional can help you navigate these changes and make the best financial decisions.

Final Thoughts: What Should You Do Next?

The rapid rise in home prices over the past five years has created new opportunities for homeowners and challenges for buyers. Whether you’re looking to sell, buy, or simply understand your home’s value, now is the time to evaluate your options.

Next Steps:

• Homeowners: If you’ve been thinking about selling, now may be an ideal time to take advantage of high home values.

• Buyers: If you’re planning to enter the market, work with an agent to explore financing options and find the best deals.

• Investors: With significant price appreciation in many states, real estate remains a strong long-term investment.
  
  

Would you like to learn more about what your home is worth in today’s market? Connect with Denise to discuss your goals and next steps.