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 many reasons you might be considering selling your house. As you weigh your options, you may find yourself uncertain about one aspect of today’s housing market—affordability. If this is your primary concern, understanding how much equity you have in your home could make your decision easier. Here are two key factors that significantly impact your equity.

How Long You’ve Been in Your Home

The first factor to consider is homeowner tenure, which refers to how long homeowners typically stay in a house before deciding to sell or move. Historically, from 1985 to 2009, the average tenure was around six years. However, according to the National Association of Realtors (NAR), that number has been increasing. Currently, the average homeowner tenure has risen to 10 years.

This is significant because your equity grows in two main ways: through paying down your mortgage and as home prices appreciate. Over a decade, consistent mortgage payments and rising property values can accumulate substantial equity. So, if you've owned your home for an extended period, you could be sitting on a considerable amount of equity that could make selling more financially advantageous.

How Home Prices Appreciate over Time

To illustrate the impact of price appreciation, take a look at this data from the Federal Housing Finance Agency (FHFA) (see the graph below):

Here’s what this means for you: While home prices can differ depending on the area, the typical homeowner who has owned their home for five years has likely seen its value increase by nearly 60%. For those who have been in their home for 30 years, the value has more than tripled during that time.

Whether you’re considering downsizing, relocating to your dream destination, or moving closer to friends or loved ones, your equity can play a significant role in making that transition smoother.

Bottom Line

If you’re curious about the amount of equity you’ve accumulated over the years and how it can help you purchase your next home, let’s get in touch.