There are several reasons you may be thinking about selling your house. As you weigh your options, you may find you’re unsure how you will deal with one thing about today’s housing market – 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 significant 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.
However, according to the National Association of Realtors (NAR), that number has been climbing.
Now, the average tenure is ten 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 increased over ten 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 by nearly 60%. And the average homeowner who’s owned their home for 30 years saw it more than triple in value then.
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
If you want to find out how much equity you’ve built up over the years and how to use it to buy your next home, let’s connect with top-rated realtors at KM Realty Group LLC – Chicago’s best real estate team!
