# Find Out What Your Home Is Really Worth — And Why It’s More Than You Think

In the long run, buying a home instead of renting pays off.

To determine the “true” value of an average home in 30 years, GOBankingRates conducted a study that analyzed the cost of renting vs. buying as well as the appreciation in home values by 2048. You might be surprised by what your home is worth.

## How Much Is My Home Worth?

In order to find out what your house is “really” worth, the study took the current national median home value of \$220,100 as the starting point. To forecast the next 30 years, the study calculated the change in home values from 2009 to 2019, based on Zillow’s home value projection for next year. This 10-year period includes the economic downturn and fallout from the housing crash, which helps make GOBankingRates’ projection more conservative and realistic. The projected 10-year growth in home values was determined to be about 43 percent or 3.4 percent per year.

The next key analysis was determining how much renting would cost for the next 30 years. Based on the current median rent of \$1,441, the study calculated that your monthly rent would reach \$2,723 after 30 years of rent growth. That means you’d spend an estimated \$720,079 on rent between 2018 and 2048 — with absolutely no equity to show for all that money.

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### Cost of Renting vs. Buying a Home

Compare the cost of renting vs. owning a home — i.e., having a mortgage and making regular monthly payments. With a 30-year fixed-rate mortgage, based on a \$220,100 home and the current average mortgage rate, you’d pay \$1,121 a month for the next three decades, avoiding the issue of rising rental rates by having fixed monthly payments.

Over 30 years of paying \$1,121 a month — or \$13,452 per year — a mortgage will cost a little over \$400,000. That means you’d save approximately \$316,519 by owning a home vs. renting: Take the \$720,079 in rent and subtract it by the \$403,560 mortgage.

In addition, your \$220,100 house would be worth close to \$640,000 by 2048, based on an average growth of 43 percent per decade, or 3.4 percent a year. When you combine the amount saved by owning (\$316,519) with your home value after 30 years of appreciation (\$639,346), you get the “real” worth of your home, which is an estimated \$955,865.

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Find Out: Here’s Why It Costs \$1,204 a Month to Maintain the Average Home

## Calculating How Much Your Home Is Worth

Several calculations were involved to figure out what your home is worth. This table shows how GOBankingRates’ study determined the cost of renting vs. owning a home:

 The True Value of Your Home by 2048 September 2018 Median Rent: \$1,441 September 2018 Home Value: \$220,100 Rent Growth: 11 percent every five years Home Value Growth: 43 percent per decade Rent Costs Over 30 Years: \$720,079 Home Value After 30 Years: \$639,346 Amount Saved by Owning: \$316,519 Home Value + Amount Saved by Owning: \$955,865

Again, it’s important to remember that these calculations are for the U.S. as a whole and deliberately conservative. Depending on which state or city you live in, your home could be worth much more than the amount determined in the study. Just imagine how rich you’d be if you bought a home 20 years ago in a city like San Francisco or Seattle.

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More on Investing in Real Estate

Methodology: In order to determine how much your home is “truly” worth, GOBankingRates calculated the cost of a 30-year fixed-rate mortgage loan at a 4.7% APR — the average as of Oct. 23, 2018, sourced from Zillow — based on the current median home value in the U.S. Next, we calculated the approximate appreciation in home value for the next 30 years, from 2018 to 2048, using an average 10-year growth rate of 3.4 percent (based on the 10-year increase from September 2009 to September 2019, which was used to simulate potential housing downturns because it includes the housing crash and recovery) and the current median home price for all homes, sourced from Zillow’s September 2018 index. This number represented a projected home value of \$639,346 in 2048 compared to the current 2018 median of \$220,100. To account for the amount that you save by owning vs. renting, we calculated the approximate cost of renting for the next 30 years, from 2018 to 2048, using the five-year average growth rate from 2013 to 2018 to approximate future increases in rent. The cost of renting in 30 years, based on the current median rent of \$1,441 and a five-year average growth rate of 11.2 percent, would be \$2,723 by 2048, and you would have spent \$720,079 in rent compared to only \$403,560 for a 30-year mortgage. By adding up the appreciation in home value and the money saved through a mortgage, we determined the “true” worth of an average home to be \$955,865 in 2048.

#### Andrew DePietro

Andrew DePietro is a finance writer with years of experience covering topics such as taxation, Social Security, entrepreneurship, investing, real estate and housing markets. His work has appeared on MSN, Yahoo Finance, Fortune, Forbes, CBS and U.S. News. Before writing for GOBankingRates, Andrew worked as a research assistant and graduated from the University of Pennsylvania with a degree in History.