The increase in a home's market value over time — one of the two sources of home equity, alongside principal paydown.
Home appreciation is the increase in a property's market value over time, driven by local demand, inflation, improvements, and broader economic conditions. Together with principal paydown, appreciation is one of the two engines of home equity. Long-run U.S. averages have historically run in the 3–4% annual range, but local markets vary widely, and values can also decline over shorter periods.
Example
A $350,000 home appreciating 3.5% annually would be worth roughly $415,000 after five years.
Also known as
appreciation, property appreciation