Home Appreciation vs Equity

Home Appreciation vs Equity

Home appreciation and equity are two different concepts related to the value of a home.

What is Home Appreciation?

Home appreciation refers to the increase in the value of a home over time. This increase can be due to a number of factors such as improvements in the surrounding neighborhood, changes in the real estate market, or upgrades made to the home itself. Home appreciation is typically measured as a percentage increase in the value of the home over a certain period of time.

What is Home Equity?

Equity, on the other hand, refers to the portion of a property's value that the homeowner actually owns. As the homeowner makes mortgage payments and the value of the home increases, equity will typically increase as well.

It is calculated as the difference between the market value of the property and the amount that the homeowner still owes on their mortgage.

For example, if a homeowner's property is worth $250,000 and they still owe $150,000 on their mortgage, then their equity in the property is $100,000.

Appreciation in Oregon

According to the Federal Housing Finance Agency, between April 2021 and April 2022, home values nationally rose 18.8%. And, according to the National Association of Realtors, Oregon’s rate of home appreciation from August 2021 to August 2022 was 7.7 percent.

The Benefits of Appreciation

Home appreciation can be a valuable asset for homeowners and can provide a variety of financial benefits over time. Here are some potential benefits of home appreciation:

• Equity Growth

• Net Worth

• Refinancing

For information about the benefits of appreciation and the factors that affect appreciation can be found on my other blog post: What Affects Home Appreciation.

In summary, while home appreciation and equity are related, they are not the same thing. Home appreciation is the increase in the value of a home over time, while equity is the portion of the home's value that the homeowner owns outright, after accounting for any outstanding mortgage balance.

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