Have you ever stopped to consider how much wealth you’ve accumulated simply by being a homeowner? As home values continue to rise, so does your net worth. If you’ve lived in your home for a few years (or longer), there’s a good chance you’re sitting on more home equity than you realize.
What Is Home Equity?
Home equity is the difference between your home’s current market value and the balance remaining on your mortgage. For instance, if your house is worth $500,000 and you owe $200,000 on your loan, you have $300,000 in equity. This represents the wealth you’ve built through homeownership.
Right now, homeowners across the country are experiencing record levels of equity. According to Intercontinental Exchange (ICE), the average homeowner with a mortgage holds approximately $319,000 in home equity.
Why Have Homeowners Gained So Much Equity?
The increase in home equity is largely due to two key factors:
- Significant Home Price Growth
Home prices have surged dramatically in recent years. According to the Federal Housing Finance Agency (FHFA), home prices nationwide have risen by 57.4% over the past five years. This means your home is likely worth significantly more today than when you purchased it. - Longer Tenure in Homes
Data from the National Association of Realtors (NAR) shows that homeowners are staying in their homes for an average of 10 years. The longer you stay in your home, the more time its value has to appreciate, increasing your equity.
If you’ve lived in your home for a decade or more, you’re in good company. 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 can you do with all that equity? It turns out your home might be your biggest financial asset, and it opens up several exciting opportunities:
- Moving to Your Next Home
Your home equity could help you cover the down payment on your next property. In some cases, you might even be able to purchase your next home in all cash. - Financing Home Improvements
Considering upgrades like a new kitchen, a home office, or other renovations? Your equity can fund these improvements, enhancing your home’s value and making it more enjoyable to live in. - Starting a Business
If you’ve been dreaming of launching your own business, your home equity can provide the necessary capital for startup costs, equipment, or marketing.
Bottom Line
Whether you’re considering selling, upgrading, or just want to understand your options, your home equity is a powerful resource. Curious about how much equity you’ve built or how you can use it to achieve your goals? Let’s connect and explore the possibilities together!
