There are a number of reasons you may be thinking about selling your house. And as you weigh your options, you may find you’re unsure how you’re going to deal with one thing about today’s housing market – and that’s affordability. If that’s your biggest concern, understanding how much equity you have in your house could help make your decision that much easier. Here are two key factors that have a big impact on your equity.
How Long You’ve Been in Your Home
First up is homeowner tenure. That’s how long homeowners live in a house, on average, before selling or choosing to move. From 1985 to 2009, the average length of time homeowners stayed put was roughly six years.
But according to the National Association of Realtors (NAR), that number has been climbing. Now, the average tenure is 10 years (see graph below):
Here’s why that’s such a big deal. You gain equity as you pay down your home loan and as home prices climb. And when you combine all of your mortgage payments with how much prices have gone up over the span of 10 years, that adds up. So, if you’ve lived in your house for a while now, you may be sitting on a pile of equity.
How Home Prices Appreciate over Time
To help show how much the price appreciation piece adds up, take a look at this data from the Federal Housing Finance Agency (FHFA) (see graph below):
Here’s what this means for you. While home prices vary by area, the typical homeowner who’s been in their house for five years saw it increase in value by nearly 60%. And the average homeowner who’s owned their home for 30 years saw it more than triple in value in that time.
Whether you’re looking to downsize, relocate to a dream destination, or move so you can live closer to friends or loved ones, your equity can be a game changer.
Bottom Line
The amount of home equity you’ve gained over the years may be more than you realize. As home values have risen steadily in recent years, many homeowners have seen significant increases in their equity. This equity can serve as a valuable financial asset, offering a range of opportunities, from funding home renovations to making a down payment on a new property, or even providing a financial cushion for retirement.
Understanding the value of your home equity is key to making informed decisions about your financial future. Whether you’re considering selling your home, refinancing your mortgage, or taking out a home equity loan, it’s important to assess how much equity you’ve built and what it can offer you.
Additionally, market trends, local housing conditions, and future projections for home prices should all be considered as you evaluate your options. Consulting with a real estate professional or financial advisor can provide you with insights on how best to leverage your home equity to meet your long-term goals.
By recognizing the value of your home equity, you can unlock financial opportunities that may have seemed out of reach.
If you want to find out how much equity you’ve built up over the years and how you can use it to buy your next home, let’s connect.
