People often say they want to wait for things like lower interest rates, saving more money, or prices dropping before they buy a house. So, we gathered data from Cherokee County to see how much house prices go up each year on average. We looked at data from the past 10 years, not just the last few years, to get a good idea. This takes us back to around 2014 when the market was recovering from a crash. Let’s see what we found.
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Average Rate of Appreciation in Cherokee annually over 10 Years: 9% | |||||||||||
Let’s take a look at some data. Here we have the Cherokee County average rate of appreciation, sorted by month, showing the median prices. Now, I mentioned “average,” but we’re actually talking about the “median.” What’s the difference between the two? Well, “average” considers all the data points, including the really high and low ones. For instance, if there are a couple of super expensive sales, they can greatly affect the average. On the other hand, “median” ignores these extreme values and focuses on the middle value. It gives us a more accurate idea of what’s typical.
Alright, let’s break down these numbers. As you can see, the rates fluctuated over the years, ranging from 9% to as low as 1% in 2024. The standout years were 2017 and 2018 with rates of 17% and 14%, respectively. Even in a weaker year like 2019, Cherokee County still saw a respectable 5% appreciation. However, over the last decade, the average rate stands at a solid 9%. Now, let’s do some quick math to break down the appreciation on the average-priced house.
Let’s say we’re using $450,000 as our median sales price with the 9% Appreciation Rate:
- Annual Appreciation Computation
- Annual Appreciation = Median Price × Average Appreciation Rate
Annual Appreciation = $450,000 × 0.09 = $40,500 per year!
- Annual Appreciation = Median Price × Average Appreciation Rate
- Daily Appreciation Computation
- Daily Appreciation = Annual Appreciation ÷ 365 Days
Daily Appreciation= $40,500 ÷ 365 ≈ $111 per day!
- Daily Appreciation = Annual Appreciation ÷ 365 Days
These calculations show how the property’s value grows each day based on the average annual appreciation rate!
What if your price point is $600,000, which is not unreasonable right now in Cherokee County, on a 9% appreciation rate?
- Annual Appreciation = $600,000 × 0.09 = $54,000 per year
- Daily Appreciation = $54,000 ÷ 365 ≈ $147 per day
Calculating the daily appreciation of a house based on its price and the average appreciation rate, such as 9% in this scenario, provides insight into how wealth grows each day. At a $600,000 price point, the daily appreciation is approximately $147. However, this calculation solely focuses on appreciation and overlooks other financial advantages like tax write-offs for interest payments and debt reduction. Over a span of 30 years, assuming the daily appreciation remains constant, the total appreciation would be substantial. For example, on a $600,000 property with a $147 daily appreciation, the cumulative appreciation over three decades would amount to $1.62 million, in addition to the original price, resulting in the property being valued at $2.2 million!
Now, you might say to me, “Jason, that’s ridiculous. This has been a very high appreciation market.” I hear you. I get it. I even agreed to some point. So let’s take a long historical average.
The sustainable historical average of real estate appreciation is around 4% per year. Let’s break down what this means for a house valued at $500,000. At a 4% appreciation rate, that’s an increase in value of $20,000 each year. Over 30 years, this amounts to $600,000, essentially doubling the house’s value to $1.1 million.
Breaking it down further, this translates to about $54.80 in growth per day. Now, let’s consider your mortgage. If you owe $350,000 and your mortgage payment is $2,500, with $1,500 going towards interest annually, that’s $188,000 over the year. If you’re in a 25% tax bracket, you could save $4,500 on your primary residence.
Factoring in debt reduction, say $1,000 goes towards the principal balance annually, bringing your total growth to about $40,000 per year. This means your daily growth jumps back up to around $100. So, even with a more conservative appreciation rate, wise investment and financial management can still lead to significant gains in real estate value over time.
“Buy real estate... then wait.”
In essence, whether you’re experiencing a 4% or a 10% appreciation rate, owning real estate can be likened to someone putting $100 into your pocket every day for the next 30 years. Imagine the value of that over time! Now, if you’re renting a property instead, you’re essentially spending the same amount of money, if not more, without any of the benefits. You miss out on debt reduction, appreciation, and tax write-offs. So, in Cherokee County, not owning real estate means missing out on these significant financial advantages every single day.
In times like these, when interest rates are high, some people hesitate to buy real estate. But my advice is different: Buy real estate, then wait. It’s not about quick riches; it’s about long-term gains. Everyone needs a place to live, so instead of spending too much on fancy stuff, buy something like what you’re already paying in rent!
If you’re interested in learning more about purchasing real estate in this market and how to succeed, CLICK HERE to reach out to us for a free consultation. We’ll provide you with our free eBook on winning strategies and can even schedule a consultation to discuss your next steps. Looking forward to connecting with you soon!