Homeownership is a major source of wealth accumulation. Housing wealth (or net worth or equity) is built up over time via the home price appreciation and the principal payments that the homeowner makes on the loan.

NAR calculated the gains in housing wealth (equity) over a 5, 10, 15, and 30 year holding period using NAR’s median single-family existing-home price data, assuming a 10 percent down payment and a 30-year fixed rate mortgage.

Homeowners typically stay in their home for 10 years, so a homeowner who bought a single-family existing-home 10 years ago (2010 Q4) at the median price of $170,567 could have $176,123 in home equity gains if the home were sold at the median price of $315,700 in 2020 Q4. The major source of the wealth creation is price appreciation: 82% of the total equity gain, or $145,133, is from price gains. Over the last 10 years, the median single-family existing-home prices have increased on average by 6.4%.

Bar chart: Wealth Equity Gains in 2020 Q4: Typical Single-Family Existing Home Purchased 5, 10, 15, and 30 Years Ago

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