The Surprising Amount of Home Equity You’ve Gained over the Years

The Surprising Amount of Home Equity You’ve Gained over the Years

There are several reasons you might be considering selling your house. As you evaluate your options, one major concern might be affordability in today’s housing market. If this is your primary worry, understanding the amount of equity you have in your home can make your decision easier. Here are two key factors that significantly affect your equity:

How Long You’ve Been in Your Home

First is homeowner tenure, which refers to the average length of time homeowners stay in their house before selling or moving. From 1985 to 2009, homeowners typically stayed in their homes for about six years.

However, according to the National Association of Realtors (NAR), this figure has increased. The current average tenure is now 10 years (see graph below):

Here’s why this is significant: You build equity by paying down your mortgage and as home prices increase. Over a period of 10 years, the combination of your mortgage payments and rising home values can result in substantial equity. So, if you’ve been in your home for a while, you might have accumulated a considerable amount of equity.

How Home Prices Appreciate over Time

To illustrate how much price appreciation contributes to your equity, consider this data from the Federal Housing Finance Agency (FHFA) (see graph below):

Here’s what this means for you: Although home prices vary by location, the typical homeowner who has been in their home for five years has seen its value increase by nearly 60%. Meanwhile, those who have owned their home for 30 years have seen its value more than triple.

Whether you’re considering downsizing, relocating to a dream destination, or moving closer to friends and family, your equity can be a game changer.

Bottom Line

If you want to discover how much equity you’ve built up and how you can leverage it for your next home purchase, let’s connect.