Over the last ten years home price appreciation accounted for 86% of the wealth gains amongst homeowners.

Homeownership is seen as the largest source of wealth among families, with the median value of a primary residence worth nearly 10 times the median value of financial assets held by families. A recent Economists' Outlook blog posted by Scholastica Cororaton, Research Economist for the National Association of Realtors (NAR), on NAR.com, found that at the national level, homeowners who purchased a single-family existing home 10 years ago have gained an average of $225,000 in home equity if the home was sold at the median sales price of $363,100 in Q3 of 2021. These gains in home equity come from paying down the mortgage and from appreciation in home prices.  

According to compounded annual growth rates, some 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.  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 resulted from price appreciation, or 84% of total home equity gains.  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 approximately three-quarters of the gain, with the typical existing-home sales price increasing by 4.2% annually.

Source: DSNews