NAR Survey Tracks Equity Gains in Real Estate

franklinIf you bought your home within the past year, congratulations: Your equity stake in your property has already risen by an average 14 percent — a gain of $31,000. If you bought your home two to three years ago, your equity has risen 15 percent. And if you bought four to five years ago, it’s up 19 percent.

These are national averages, compiled this summer by the National Association of Realtors for its annual Profile of Home Buyers and Sellers. The numbers were released this week by Realtor.com, and they confirm the long-term value of real estate investments: Overall, home sellers had $40,000 in equity in their property, a median gain of 23 percent from the time of purchase.

And sellers who held onto their homes for 21 years or more did even better: $138,000 in equity, a gain of 145 percent.

But there’s one big caveat in these numbers: Equity gains average just 1 percent, or $3,000, for sellers who bought their property during the height of the real estate bubble, just before the Great Recession.

Those who bought their homes eight to 10 years ago paid top-of-the-market prices, only to watch them plunge in succeeding years. It’s taken all the years since then for these owners to climb out of negative equity and break even or a bit better.

Buyers from those volatile years may be holding onto their homes longer than usual today to let equity levels rise even higher, which is likely a factor in the inventory shortages that have gripped real estate markets nationwide — and particularly here in the Bay Area.

Here’s a detailed look at NAR’s numbers rearding equity levels for home sellers in 2015:

Years Owned Equity Earned  Gain in Equity
1 year or less $31,000 14%
2-3 years $30,000 15%
4-5 years $35,000 19%
6-7 years $31,000 14%
8-10 years $3,000 1%
11-15 years $38,000 23%
16-20 years $95,000 63%
21-plus years $138,000 145%
All sellers $40,000 23%

(Image: Flickr/Ervins Strauhmanis)

 

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