Homeowners

Why Holding onto Your Home Can Really Pay Off Over Time

In a housing market known for high prices and a shortage of homes for sale, it could be tempting for first-time buyers to simply give up. But that decision could cost them.

Homeownership has long been one of the main ways that Americans have traditionally built wealth. Homes typically appreciate in value over time. And instead of paying rent, owners accumulate equity in their properties.

For many homeowners who stayed put in their properties, their patience has paid off.

Nationally, home values increased by about 180% between December 2000 and December 2025, according to the Zillow Home Value Index. Since 2015, home values rose 83%.

“There are very few other assets that can compare to the advantages of owning a home,” said Norm Miller, an emeritus professor of real estate at the University of San Diego.

“Gold, a common inflation hedge, produces no income, no services, and no tax advantages,” he said. “Cryptocurrencies are extremely risky and volatile and again, provide no utility. So, housing is one of the very best choices for the average American.”

Home appreciation: Why home prices generally rise over time

It’s impossible to control just how much your home appreciates. It depends on your local market.

Home values are generally tied to supply and demand. In markets where there is strong demand and few homes for sale, home values tend to rise higher than where the reverse is true.

And there are situations where home values can go down. This happened during the Great Recession, where there was a glut of homes for sale and few buyers for them. Although, prices did eventually begin to rise again.

Home values can also fall after a natural disaster or when a major employer leaves an area, leading to less demand for housing.

Historically, however, national home prices have recovered and risen over time.

How long should you stay in your home?

Generally, the rule of thumb is homeowners should stay in their homes for at least five years before selling. This gives them enough time to pay down enough of the balance and for values to increase enough to cover closing costs, so you’re not losing money on the sale.

However, the exact amount of time you will need to spend in the home will depend on your local market.

And the longer you hold onto your property, the higher your home value is likely to rise.

Building home equity with every mortgage payment

When you rent a place, you’re paying your landlord. When you own a home, a portion of your housing payment goes toward yourself.

Every monthly mortgage payment chips away at the principal balance of a loan. This is how much money you borrowed to buy a home. This gradually increases a homeowner’s stake in the property.

Home equity, the difference between what a home is worth and what the owner still owes, grows in two ways: as the borrower pays down the balance and as the property appreciates in value.

“What does make housing special for building wealth is the forced saving that is part of any mortgage,” said Lawrence J. White, a professor of economics at New York University’s Stern School of Business. “Even if prices don't increase, the homeowner gains a larger net ownership position in his or her [home.]”

And homeowners can often tap into that equity if they need cash.

Additionally, homeowners may also be able to deduct mortgage interest and property taxes from their taxes. That may reduce their annual housing costs.

How to tap into your home equity when you need it

One of the underappreciated perks of building home equity is the ability to access it.

A Home Equity Line of Credit (HELOC) is like a checkbook to your home equity. Homeowners are approved for a certain amount and then you can take as much of it as you need for a set period of time, generally around five to 10 years. Then you pay it back, typically over 10 to 20 years.

Meanwhile, a cash-out refinance replaces an existing mortgage with a larger loan tied to a homeowner’s home equity. Borrowers often tap the extra cash for debt consolidation, home improvements, or other large expenses.

Homeowners with a low mortgage interest rate may also want to consider a second mortgage. This is a separate mortgage secured by the property’s equity.