Over time, houses tend to appreciate an
average of 2 percent to 3 percent a year, according
to economists with the Office of Federal Housing Enterprise
According to Neala Richardson, principal
economist with Freddie Mac, the lender puts those numbers
a little higher. It calculates that long-range, houses
appreciate an average of 5 percent to 6 percent annually.
Also realize that there are no hard-and-fast absolutes.
Why you have to borrow is important, too. If you need
the money to get you through a tough spot, (job loss,
medical needs), weigh your options and tread carefully.
If you're borrowing because you lost a job and want
to keep the house, that's one thing. But if you want
to pay down the credit cards so you can charge them
up again, it's smarter (and a lot safer) to slice your
DO reanalyze your investment
It's one thing to hang onto a house because rent will
cost you just as much each month and you know that your
house will (eventually) appreciate. But if you're talking
about an investment property and you see signs of home
depreciation in the area, then you may want to take
another look at the numbers.
"Investor properties are the ones that will be
more susceptible to a drop," says Retsinas.
Some things to look at: Can you cover the mortgage?
If you have an ARM, will you still be able to cover
it if rates go up? Will you make enough in rent to cover
your payment? What happens if you have to go a few months
with no tenant? And do you have an exit strategy if
later the numbers aren't where you'd like?
Smart money: "Rely on the basic economy of the
property, rather than perceived appreciation,"
DON'T get carried away with unnecessary
"If you're making improvements, make improvements
that will sustain its value," says Retsinas. "Nothing
When selling, to get the maximum amount for your house,
it has to appeal to the most number of buyers. Increasing
rates and buyer uncertainty mean there will be fewer
prospects, thus reducing your potential market of buyers.
You don't have to put off renovating the kitchen or
converting that basement into an office. Just beware
of adding extra "frills" or atypical features
that could alienate some buyers.
Whatever the home values are doing in your area, you
want your home to uphold its highest possible worth.
That means keep up the maintenance and make sure it's
a clear winner.
"If you're concerned about a down market,"
says Retsinas, "make sure your property, your home
has something to offer that will make it stand out."
Dana Dratch is a freelance
writer based in Atlanta.