The money plant grows bigger
Earlier this month, the National Association of Realtors (NAR) released a special study titled Single-Family Home Price Gains by Years of Tenure. The study estimates median home price appreciation over the last 30 years based on the length of homeownership.
Below are three graphs depicting the most important data revealed in the study.
How Much Have Home Prices Increased?
One of the first measures of the financial benefits of homeownership is the net worth (in the form of equity) an owner can build over time. The study showed the average increase in home values based on how long homeowners stayed in a home.
So lets say you buy a home and make zero updates to it. Home equity is the value gain you are experiencing due purely to appreciation. We’ve been in a unique position here in Denver seeing 2X to 3X the appreciation that the rest of the nation is experiencing. If you have made updates to your home your equity could be even higher! See how much equity you have built in your home.
What Was the Percentage of Appreciation?
Another way to look at this is by the percentage increase in value over time, called appreciation:
Was This Appreciation Consistent Throughout the Country?
And the West wins again seeing the highest appreciation of all United States regions. Today, when we think of markets that have done well over the last decade, we have a tendency to think about San Francisco, San Diego, Denver, Seattle, and other West Coast cities. Though it is true the West Region showed the highest price growth over the last three decades, we can see how every region of the country did quite well in ten-year increments: This data validates the claim that homeownership is great for building wealth. The importance of this information was highlighted in the study’s first sentence:
“Homeownership is an important source of wealth creation, enabling current homeowners and succeeding generations to move up the economic ladder.”
Homeownership has many financial and non-financial benefits. The accumulation of “housing wealth” through increased equity is a major one. If you’re thinking of buying a home for the first time or moving up to your dream home, the sooner you make the move, the sooner your net worth will begin to grow. Search for your Denver home today!