How Much Has Real Estate Appreciated in 20 Years?

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Anyone who spends any time perusing BiggerPockets is well aware that it’s good to own real estate. Yes, there are downturns like the 2008 financial crisis. But for the most part, real estate goes up in value and provides all sorts of other financial benefits.

Indeed, as The Visual Capitalist notes in a recent analysis, “At the turn of the century, the average US home value was $126,000. Today, that figure is at a record high $259,000—a 106% increase in just two decades.”

Of course, those prices have not been consistent from place to place. Indeed, the other thing anyone who peruses BiggerPockets is well aware of is that—with real estate—it’s all about “location, location, location.”

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Charting home price appreciation across the United States

The Visual Capitalist also put together some very cool charts based on Zillow data to show how the 500 biggest US housing markets fared over the last 20 years. As can be seen, the cities’ property values generally move together, but there is plenty of variation from place to place.

Interestingly enough, there were more than twice as many cities that were below the national average (356) than those above it (144). It shouldn’t be too much of a shock to see which ones came out on top. The biggest gains in the entire United States were found in Madera, California—and San Jose and San Francisco rose impressively, too, with 235% and 219% appreciation respectively.

Indeed, the West Coast was well ahead of the rest of the country as the following chart makes plainly obvious:

Clearly, a large part of this was the tech boom that began in the early aughts and was centered in California. With California’s recent struggles and the large numbers of people leaving cities like San Francisco, it will be interesting to see if these trends can continue or will begin to falter.

On the other side of the coin, the Rust Belt has fared poorly. Prices grew the slowest in Detroit and Chicago, and Illinois, Michigan, and Ohio were the bottom three states.

Of course, many of these cities are also much better cash flow markets than coastal cities like Los Angeles and New York. They are also generally much more affordable for investors with limited funds. So not all is lost in the Rust Belt, although many areas are ones I would be quite cautious about investing in.

Flint, Michigan, for example, not only went down in value, but it did so with 20 years of inflation.

The United States certainly has a lot of problems right now, as does the world. At the same time, the real estate market appears irrationally hot. While these points merit caution, the above charts should also make clear how powerful investment in real estate can be in the long term.

Remember, a 106% increase is only what you would make if you bought properties for all cash. If you got loans for 75%, your return would be four times that, or 424%! Of course, leverage comes with risk, but that can be mitigated by buying right and getting equity right off the bat. Once you have done that, the appreciation will eventually kick in—and that’s where the real wealth from real estate comes from.