How To Calculate Future Home Values
A house is an investment in addition to being a place of residence. Like any investment, it is possible to predict what its value will be in the future to determine how sound of an investment it is. In order to do this, you need to know the home's current value and historical home value for your area.
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Things You'll Need
- Calculator
- Historical home value change data for your area
- Current home value
Instructions
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How to Calculate Future Home Values
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1
Estimate your home's current value or have an assessment done so you know how much is currently invested. For example, your home may currently be worth $100,000.
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2
Using historical price trends, estimate how much your home's value will increase as a percentage per year. For example, based on how home prices have increased in the past, you may expect your home's value to increase at a rate of 6 percent per year.
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3
Determine how many years in the future you want to predict your homes value. For example, you might want to predict how much your home will be worth in 10 years.
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4
Plug the numbers you have recorded in steps one through three into the following formula: FV = CV * (1+ R) ^ T where FV is the future value, CV is the current value, R is the rate, and T is the time. In this example, CV is 100,000, R is 0.06, and T is 10. Therefore, the house's estimated future value is 179,084.77.
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Tips & Warnings
Past performance does not always guarantee future growth. For example, just because home prices in an area have jumped 10 percent per year for the past decade does not guarantee they will do the same thing for the next 10 years.
