That's right - with very few exceptions comprising limited time frames in certain metro areas near Washington, D.C. For the vast majority of Americans in the vast majority of time periods, that is absolutely not the case. There's a weird belief - here in the Bay Area, certainly, but likely elsewhere as well (if our friends are to be believed) that in America, primary residences are the best investments that many people have made. Was Your Old Apartment a "Better Investment"? Maslow may have been correct in saying that shelter is high (read: low) on your hierarchy of needs, but that doesn't mean your home is sacred. The Sacred Belief - Homes Are "Good Investments" Inflation Adjusted Real Estate Return - The amount this home returned annually after inflation was factored in.Annualized Real Estate Return - The amount this home returned annually.Show Table - Shows the sequence of cash flows we use to calculate (ahem, attempt to calculate - it doesn't always converge) the internal rate of return on your home purchase.Home Insurance - The cost, annually, to insure the home.It is included in this field by default as the typical 6%. Note: do not count the realtor fee twice. Fees/Commissions Selling - Same thing, except for sales.Fees/Commissions Buying - Recording Fees, Taxes disguised with fees, agent fees, and whatever else came with buying the house, as a percentage of the purchase price. Annual Rent Increase - The amount the rent increased every year.Starting Rent - How much did the home rent for on the start date? (Note: this could also be used to compare "value versus renting" if you use a realistic estimate here).Also edit "Marginal Tax Rate" if you select this. Can Write Off Interest & Property Tax? - If the home owner could itemize deductions and write off mortgage interest and property taxes.Property Tax Increases Capped? - If the state/city limits the increases in property tax annually, check this box and edit "Max Property Tax Increase" to set the annual increase.Property Tax Rate - Annual property tax on the home in question.Annual HOA Increase - Percentage HOA increases annually.HOA - Monthly Homeowner Association Fee.PMI Rate - For dates when equity was less than 20%, what PMI rate was paid annually?.(For a cash purchase, set the down payment equal to the buy price.)Īdvanced - (Usually these are close enough edit if you're brave) Down Payment - Cash (not including closing costs!) put down towards equity when the house was bought.Sell Price - Either sale or estimated value on ending date.Buy Price - Agreed upon value on starting date.Ending Date - Either the date the house was sold, or the ending date where a value is estimated.Starting Date - The date a house was first purchased.(This data goes back to 1975 in most areas.) It will also load mortgage rate data on 30 year mortgages from Freddie Mac's 30 year mortgage rate report. Note that hitting 'Populate' will snap the dates to our most recently loaded data - which is pegged to updates on the Freddie Mac House Price Index. Estimated Values - We automatically populate 356 Metropolitan Statistical Areas, and attempt to guess the values of median homes at the dates you give us.Real Estate Return Calculator How to Use the Real Estate Return Calculator We guess the median values and actual returns for any of 356 American Metropolitan Statistical Areas in an attempt to tell all of our American readers how well their homes have performed as an investment. In this article, we present a Real Estate Return Calculator, for quickly estimating the return on a house in many areas in the United States.
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