25-Jan-2009 NEW CALCULATOR: How much is my house worth ?

Nick's picture

If you want to know: "How much is my house worth ?", then I have a very basic calculator for you.

  • If you are considering selling your house or maybe even if you want to buy, this calculator can help.
  • Simply enter what you think the peak market price was, the date you think the market peaked in your area, and the annual change since...
  • The calculator will then work out what your house (or the house you want to buy) is worth today.
  • It will also show you how the value will change over time given your inputs.

One thing that a lot of people forget (or don't understand) is basic percentages.

Question 1: If your house price has gone down 10% per year for 2 years, how much has it gone down from the peak value ?

Answer 1: NOT 20%

The correct answer is actually 19%. The reason is that it goes down 10% in the first year, so in the second year, it loses 10% again, but not of the full amount. This time it's already 90% of the original price, and 10% of 90 is 9.

Question 2: If it goes down 33%, buy what percentage does it need to rise to get back the original level ?

Answer 2: NOT 33% !!

It actually needs to rise by a whopping 50% to return to the original price. The difference is due to the asymmetry of percentages.

Here's a screen shot of my "How much is my house worth ?" calculator:

How-Much-Is-My-House-Worth.xls33.5 KB