Have you ever stopped to think about how much wealth you’ve built just from owning your home? As home values rise, so does your net worth. And if you’ve been in your house for several 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 market value and what you owe on your mortgage. For instance, if your home is worth $500,000 and your outstanding mortgage balance is $200,000, you have $300,000 in equity. It’s wealth you’ve built through homeownership, and it’s a financial resource you can tap into. Right now, homeowners across the U.S. are experiencing record equity gains.
According to Intercontinental Exchange (ICE), the average homeowner with a mortgage has $319,000 in home equity.
Why Have Homeowners Gained So Much Equity?
The rise in home equity can be attributed to two key factors:
1. Significant Home Price Growth
Home prices have risen dramatically in recent years. According to the Federal Housing Finance Agency (FHFA), home prices have appreciated by 57.4% nationwide over the past five years. This substantial growth likely means your home is worth significantly more today than when you purchased it.
2. Longer Tenure in Homes
Another driving factor is that homeowners are staying in their homes longer. Data from the National Association of Realtors (NAR) highlights that the average seller now remains in their home for 10 years, up from an average of 6 years prior to 2009.
This trend means homeowners benefit even more from sustained home price appreciation. Over time, these price gains translate directly into equity. According to NAR, homeowners who’ve stayed in their homes for a decade or more have seen a staggering $201,600 increase in wealth due to price appreciation alone.
The Benefits of Having Home Equity
So, what does all this equity mean for you? It means your home might be your largest financial asset and a powerful resource for your future. Here are just a few ways you can leverage your home equity:
Moving to Your Next Home
Your equity can help cover the down payment on your next home or even enable you to buy your next house with all cash.
Financing Home Improvements
Planning to upgrade your kitchen, add a home office, or invest in other renovations? Home equity can fund these improvements, increasing both your home’s value and your enjoyment.
Launching a Business
Dreaming of becoming your own boss? Use your equity to kickstart your entrepreneurial journey by covering startup costs, equipment, or marketing expenses.
Bottom Line
Your home equity is more than just a number — it’s a resource that can help you achieve your goals, whether they involve moving, upgrading, or pursuing new ventures. If you’re curious about how much equity you’ve built or want to explore how to make the most of it, let’s connect to discuss your options.
