How Your Equity Can Grow over Time

It is true that over the previous few years, unprecedented home price increases have resulted in large equity gains for homeowners. According to CNBC's real estate correspondent Diana Olick:

“The stunning jump in home values over the course of the Covid-19 pandemic has given U.S. homeowners record amounts of housing wealth.”

That’s great for your home’s value over the last couple of years, but what if you’ve lived in your home for longer than that? You may be wondering how much equity you truly have.

A research was conducted by the National Association of Realtors (NAR) to determine the normal equity gains across longer time periods. You might be inspired to move once I share the data they gathered. Just keep in mind that you should obtain a professional equity evaluation from a reputable real estate advisor to determine how much equity you have in your particular residence.

How Your Equity Grows

Let’s start by establishing how you build equity in your home. While price appreciation is clearly a factor that can help boost your equity, you also build equity over time as you pay down your home loan. NAR explains:

“Home equity gains are built up through price appreciation and by paying off the mortgage through principal payments.”

Average Equity Growth over Time

The NAR analysis shows the typical equity rise over time (see graph below). It computes the equity that a homeowner may have accrued had they remained the current owners of the median-priced home five, ten, or thirty years after purchasing it.

These six-figure numbers are impressive and certainly enough to help you fuel a move into your next home, but they’re not a promised amount. Remember, your own equity gain will be different. It depends on how long you’ve been in the house, your home’s condition, any upgrades you’ve made, your area, and much more.

Work with a reputable real estate agent to get your home's equity assessed if you want to know how much equity you have. I offer a professional assessment on the current market value of your property and how the equity you've built up over time will benefit you when you buy your next house. You may only need a portion of it,  not all of it, for your subsequent down payment.

Bottom Line

Home equity may really change the game if you're considering selling your home and moving, especially if you've lived in your current home for a while. Let's connect if you're prepared to learn how much equity you have.