How Much Home Equity Have You Gained? The Answer Might Surprise You

How Much Home Equity Have You Gained? The Answer Might Surprise You

Have you considered the wealth you've accumulated simply by owning a home? As property values increase, so does your net worth. If you've lived in your home for several years, you might be sitting on a significant amount of equity — possibly more than you expect.

What Is Home Equity?

Home equity represents the difference between your home's market value and the remaining balance on your mortgage. For instance, if your home is valued at $500,000 and your mortgage balance is $200,000, your equity amounts to $300,000 — a reflection of the wealth you've built through homeownership. Currently, homeowners nationwide are experiencing record levels of equity.

As reported by Intercontinental Exchange (ICE), the average homeowner with a mortgage holds $319,000 in home equity.

Why Have Homeowners Gained So Much Equity?

The rise in home equity over the years can be credited to two key factors:

1. Significant Home Price Growth

Home prices have seen a significant rise in recent years. According to the Federal Housing Finance Agency (FHFA), nationwide home prices have increased by 57.4% over the past five years (see map below for details):

This appreciation means your house is likely worth much more now than when you first bought it.

2. Longer Tenure in Homes

According to data from the National Association of Realtors (NAR), the average homeowner stays in their home for about a decade (see graph below for more details):

This extended tenure allows homeowners to capitalize on the consistent growth in home values over time. The longer you’ve lived in your house, the more appreciation you’ve likely seen, directly boosting your equity.

If you’ve been in your home for 10 years or longer, you’re in a strong position. According to NAR:

“Over the past decade, the typical homeowner has accumulated $201,600 in wealth solely from price appreciation.”

The Benefits of Having Home Equity

What does this mean for you? It means your home could be your most significant financial asset, offering a wealth of possibilities for your future. Let’s explore how you can leverage this advantage.

• Moving to Your Next Home

Your home equity could serve as a powerful financial tool. It might help cover the down payment for your next property or, in some cases, even enable you to purchase your next home outright with cash.

• Financing Home Improvements

Considering a kitchen upgrade, adding a home office, or taking on other projects? Your home equity can help fund those improvements, enhancing your home's value and making it an even better place to live.

• Getting a Business Going

Dreaming of starting your own business? Your home equity could be the boost you need. From covering startup costs to purchasing equipment or funding marketing efforts, leveraging your home’s value can help turn your entrepreneurial vision into reality.

Bottom Line

Whether you’re planning to sell, upgrade, or just curious about your options, your home equity is a valuable asset. Want to know how much equity you’ve built or how it can help you achieve your goals? Let’s connect and explore the opportunities together.