Platform · Glossary
Home price growth.
Home price growth is the annualized rate 3Y uses to model potential changes in a property’s value over time.
3Y supplies a local default based on available price-history data. You can override it when you have a different supportable assumption.
What 3Y sources it from
3Y uses the Federal Housing Finance Agency House Price Index, or FHFA HPI, as the source for home price growth.
FHFA HPI follows repeat sales of the same properties over time. This makes it better suited to measuring price movement than a median sale price, which can change because the mix of properties sold has changed.
The pipeline uses FHFA’s annual tract-level HPI. Because FHFA’s tract series uses 2010 Census tract identifiers, 3Y maps the data to the current tract geography through the Census Bureau’s tract relationship files.
Where the focal tract does not contain the required FHFA observations, 3Y resolves the metric through its adaptive local-area and documented broader fallback process rather than mixing in a different home-value series.
How 3Y calculates it
3Y calculates two local FHFA growth rates:
- a 10-year FHFA compound annual growth rate, representing the longer-term trend; and
- a 3-year FHFA compound annual growth rate, giving more weight to recent market movement.
The recent rate receives 65% of the blend and the longer-term rate receives 35%. The result is then capped at the 10-year rate.
modeled home price growth =
min(
10-year FHFA CAGR,
65% × 3-year FHFA CAGR + 35% × 10-year FHFA CAGR
)
This allows recent cooling to lower the projected growth assumption while preventing a short period of rapid appreciation from lifting it above the longer-term FHFA trend.
How to read it
Home price growth is an assumption, not a promise that the property’s value will rise at that rate.
A higher assumption increases modeled future value and appreciation. A lower assumption places more of the investment outcome on current cash flow and loan paydown rather than future price movement.
Because projected outcomes can be sensitive to appreciation, investors should pressure-test the analysis using lower growth assumptions when evaluating a deal.
Where it appears in a 3Y analysis
Home price growth contributes to:
- the Housing market portion of the 3Y Location Score™; and
- the report’s long-term projections, where it is used to model potential appreciation and projected return on investment over time.
The report highlights possible hold, refinance, or sell paths at the 5-, 7-, and 10-year milestones. These are modeled scenarios based on the assumptions used in the analysis, not guaranteed future values, appraisal opinions, or predictions of what a buyer will pay.