Have you ever considered how much wealth you've accumulated simply by owning a home? As home values increase, your net worth grows too. If you've been in your home for a few years or longer, you might be surprised at how much equity you've built up—likely more than you think.

What Is Home Equity?

Home equity refers to the difference between your home's market value and your outstanding mortgage balance. For instance, if your home is valued at $500,000 and you have $200,000 left on your mortgage, you currently have $300,000 in equity. This equity represents the wealth you’ve accumulated through owning your home. At this moment, homeowners nationwide are experiencing significant amounts of equity.

Intercontinental Exchange (ICE) reports that the typical homeowner with a mortgage has about $319,000 in home equity.

Why Have Homeowners Accumulated So Much Equity?

The increase in home equity over the years can be attributed to two main factors:

1. Substantial Increase in Home Prices

Home prices have surged significantly in recent years. According to the Federal Housing Finance Agency (FHFA), home values across the country have increased by 57.4% over the last five years.

This appreciation suggests that your home is probably worth significantly more today than when you initially purchased it.

2. Extended Homeownership Duration

According to the National Association of Realtors (NAR), homeowners are now staying in their properties for about ten years.

Homeowners gain even more from rising home values as they stay in their properties longer. The longer someone lives in their home, the more its value typically increases, which in turn boosts their equity.

If you've been in your home for 10 years or more, here's something to keep in mind according to NAR:

“Over the past decade, the typical homeowner has accumulated $201,600 in wealth solely from price appreciation.”
— NAR

The Benefits of Having Home Equity

What does that mean for you? It means your home could be your largest financial asset, possibly leading to some great opportunities for your future. Let’s explore this further.

  • Transitioning to Your Next Home

Your equity might be just what you need to pay for the down payment on your next home. In some situations, it could even allow you to purchase your next house outright with cash.

  • Funding Home Renovations

Upgrading your kitchen, adding a home office, or working on other projects? Your home equity can help cover those improvements. Not only will these upgrades enhance your living experience, but they'll also boost your home's value.

  • Starting a Business

If you've been thinking about launching your own business, tapping into your home's equity might be just what you need. It can help cover startup expenses, buy equipment, or even fund your marketing efforts, making it easier to turn your entrepreneurial dreams into reality.

Bottom Line

If you're considering selling, looking to upgrade, or just want to know what options you have, your home equity can really be an asset. Curious about how much equity you've accumulated or how it can help you reach your goals? Let's connect and explore what’s possible.