The Surprising Amount of Home Equity Youve Gained over the Years

There are a number of reasons you may be thinking about selling your house. And as you weigh your options, you may find youre unsure how youre going to deal with one thing about todays housing market and thats affordability. If thats 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 Youve Been in Your Home

First up is homeowner tenure. Thats 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.

Butaccordingto theNational Association of Realtors(NAR), that number has been climbing.Now, the average tenure is 10 years (see graph below):

Heres why thats 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 youve 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 thisdatafrom theFederal Housing Finance Agency(FHFA) (see graph below):

Heres what this means for you. Whilehome pricesvary by area, the typical homeowner whos been in their house for five years saw it increase in value by nearly 60%. And the average homeowner whos owned their home for 30 years saw it more than triple in value in that time.

Whether youre looking todownsize, relocate to adream destination, or move so you can live closer to friends or loved ones, your equity can be a game changer.

Bottom Line

Connect with a local real estate agent if you want to find out how much equity youve built up over the years and how you can use it to buy your next home.