January 8th 2022

Homeownership is the largest source of wealth among families, with the median value of a primary residence worth about ten times the median value of financial assets held by families.1 Housing wealth (home equity or net worth) gains are built up through price appreciation and by paying off the mortgage. At the national level, a homeowner who purchased a single-family existing home 10 years ago would have gained $225,000 in home equity if the home were sold at the median sales price of $363,100 in 2021 Q3.

Home equity gains in the past 5, 10, 15, 30 years

Homeowners who sell their property typically stay in their home for 10 years.2 Nationally, as of 2021 Q3, a homeowner who purchased a single-family existing-home 10 years ago at the median sales price of $169,000 is likely to have accumulated $225,000 in home equity or housing wealth if the home were sold at the median sales price of $363,100 in 2021 Q3.3 The gains in home equity come from paying down the mortgage and from appreciation in home prices. Breaking down the $225,000 in home equity gains over a 10-year period, 86% of the gains come from price appreciation of $193,600 and principal payments totaling $31,300. Over a 10-year period, home prices have increased 7.9% annually, a stronger appreciation compared to the 4.2% annual price pace in the past 30 years.4

Home Equity Gains on a Typical Single-family Existing-Home Purchased 5, 10, 15, 30 Years Ago as of 2021 Q3 

Median Single-family Existing-Home Sales Price

The past five years have seen increasingly rapid price appreciation. Nationally, median single-family existing-home sales rose 8.5% annually from 2016 Q3 through 2021 Q3. A homeowner who purchased a typical home five years ago would have accumulated $144,400 in home equity, of which $121,800 are from price appreciation, or 84% of total home equity gains.

While home prices fell about 30% from the peak level in 2006, home prices have rebounded, with the median single-family existing-home sales price rising at an annual pace of 3.2% from 2006 Q3 through 2021 Q3. A homeowner who purchased a home 15 years ago would typically have accumulated $193,300 in home equity, of which $137,700 is price appreciation.

Over a 30-year period, a homeowner who purchased a typical single-family home would likely have accumulated $354,400 in home equity, with $258,700 in housing wealth home price gains accounting for about three-quarters of the gain, with the typical existing-home sales price (median sales price) increasing by 4.2% annually over a 30-year period.