It might be a barbecue conversation, or a dinner table item, but it comes up often - how much has your house value risen?
It's easy to mentally work out the gain in dollar terms. But we all know that this has happened over time.
And if you compare one situation with another, the only clear way to reconcile them is to have a time-adjusted gain - a compound rate per year. Everyone intuitively understands that.
We have a simple calculator that can help.
Enter your starting value, the value now, and the years between the two.
From first principles, you could work it out from this formula:
Or you could just use our handy tool, here. Much easier.
The result of either gives an answer smoothed of the volatility in-between the starting value and the ending one, and that is probably what you want to know anyway.
*This calculator was developed by Calculate.co.nz and is in our calculator toolbox as part of our partnership with them.
18 Comments
I don't think you can take into account opportunity cost. But it would be fair to include the compulsory costs;
- Interest
- Rates
- House insurance
and I think there could also be an argument to potentially factor in some form of repair/maintenance over the duration of the mortgage.
Do all that, compare to inflation over the same period... and yes, I think it is pretty clear that any form of Capital Gains tax, value tax, etc... on a family home is unfairly punative.
I was quite surprised by the results.
My place is 3.8% per year over 10 years. I did some additional calcs, and if it continues to increase at that rate, there would be a small net loss (compared to interest paid over the life of a standard 30 year mortgage)
Hardly the tax free gains many here whine about.
Imputed rent - probably one of the more idiotic economic theories.
Anything can have an imputed value. So why only houses?
Should we apply the same logic to Cars? Food? Water? Air? Clothing? What about income when I work on my Garden/Car/House? The kids toys? Tools in my shed?
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