3 States Where Your Home Could See the Biggest Price Jump in 5 Years

The road to homeownership has been quite difficult for many Americans lately. The combination of inflation , soaring mortgage rates, low inventory and high prices has left many buyers on the sidelines — for now.

And for homeowners, there are also specific challenges — such as feeling “locked in” by a low mortgage they secured a few years ago, hence being on the fence about selling even if they want or need to.

Yet, as a new Realtor.com report noted, “patience pays.” And while real estate appreciates over time, it can be difficult to estimate exactly how much it will increase in value due to a slew of macroeconomic factors.

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To put this in context, in May, the median home price increased to $419,300, a 5.8% price jump in the past year. It was “the highest price ever recorded and the eleventh consecutive month of year-over-year price gains,” according to the National Association of Realtors’ existing home sales report that was released on June 21.

But as the new Realtor.com report showed, not only does patience pay, but in certain pockets of the country, it can pay even more. Here are three states where homes could see big price jumps in five years .

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States With the Highest Five-Year Returns

Indeed, according to the report, the three states that have seen the highest average five-year returns are Massachusetts, with a 36% gain; Rhode Island, with a 34% increase; and California, with a 34% jump.

According to Realtor.com data, 26% was the average five-year return for homes across the U.S. and the median list price of a house in May stood at $442,500. So in five years, “this same listing could appreciate to about $557,550.” But that appreciation would amount to much more in states seeing price increases higher than the national average.

Realtor.com ‘s senior economic analyst Hannah Jones said that Northeast markets, such as Rhode Island and Massachusetts, have seen substantial price growth over the last five years and home shoppers have looked to spread out into areas that offer more bang for your buck as well as proximity to large business hubs.

“We have seen substantial price growth in Boston-area commuter markets as buyers look to balance access to the city and more affordable housing,” Jones said.

Meanwhile, she noted that California has seen substantial price growth as limited inventory has pushed already high prices even higher, especially in more affordable parts of the state.

“Home shoppers set on homeownership have flocked to slightly more affordable areas in California, which has taxed available inventory and driven prices higher,” she said.

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Real Estate’s “Five-Year Rule of Thumb”

As Jones explained, generally, the longer a buyer owns a property, the less likely it is that they will suffer from short-term housing market conditions when they sell.

However, Jones also noted that unforeseen circumstances, such as the COVID-19 pandemic, can mean you’ll see different outcomes depending on when you buy or sell.

“It is tricky to time the market, so buying a home you can comfortably afford with the intent of holding on to your home for at least five to 10 years is the best way to shield yourself from losing in a home sale,” Jones said. “Once you do decide to sell, you can evaluate your ideal sale time frame with current market conditions to capitalize on whichever factors (speed of sale, price, number of offers) matter most to you.”

This article originally appeared on GOBankingRates.com : 3 States Where Your Home Could See the Biggest Price Jump in 5 Years