Home prices have been appreciating at record levels. For the average homeowner, this means substantial equity gains, adding up to $64,000 in equity in the last year. As home values climbed throughout the pandemic, the prosperity of American homeowners did too.
Home equity is accumulated through a combination of price appreciation and paying the principal payments on a mortgage. The longer you remain a homeowner, the more you can stand to gain.
Here’s an example:
- Pulsenomics’ quarterly Home Price Expectation Survey, compiled from input from more than 100 economic, real estate, marketing, and investment experts, called for home prices to continue appreciating over the next five years.
- Based on these projections, a typically priced ($390,000) home purchased in January 2022 could gain $36,270 in equity within one year.
- Within five years, the same home could see a total of $102,787 in equity gains.
These numbers illustrate why so many Americans see homeownership as their top long-term investment. Owning a home is how most people in the U.S. build their prosperity. If you’re ready to buy a house, this investment can also be money-saving. As rents and inflation climb, your monthly mortgage payment will stay relatively fixed. This is why homeownership is largely considered an effective hedge against inflation.
Homeownership ranks as Americans’ number one investment, and it’s also still part of the American dream. While the American dream is entirely personal, it often encompasses prosperity, success, and freedom. Homeownership speaks to all these goals as it can support a sense of achievement, community belonging, and financial stability. (Read more about feel-good reasons to become a homeowner this year.)
In a recent Bankrate survey asking participants to rank markers of economic prosperity, homeownership again came out on top. Nearly three-quarters of respondents said they prioritized owning a house over being prepared to retire (66 percent), career success (60 percent), owning a car (50 percent), having kids (40 percent), and graduating from college (35 percent).