Appreciation is an increase in the value of an asset over time, caused by factors like inflation, increasing demand, and improvements to the property. A decrease in value, on the other hand, is referred to as depreciation.
In Montreal, homes can be expected to appreciate at an average rate of 4-5% annually.
How to calculate appreciation:
Finding the rate at which a home has appreciated over time requires a very simple calculation.
Imagine you bought a house for $200,000 and sold it five years later $250,000.
To find the appreciation rate, use these two formulas:
New value – old value = change in value
Change in value ÷ old value = percent of change in value
- $250,000 – $200,000 = $50,000
- $50,000 ÷$200,000 = 0.25 or 25%
The property has thus appreciated buy 25% since its purchase.