Americans have once again proven that homeownership is one of the keys to long-term wealth accumulation.

According to mortgage data provider Black Knight, total U.S. home equity reached a staggering $16.9 trillion in the first quarter, a new all-time high.

That’s the amount of personal wealth homeowners have accrued by paying down their principal balances and seeing the value of their property appreciate over time.

Of that total, $11 trillion can be leveraged, or withdrawn as cash based on the current value of U.S. real estate.

By the end of the first quarter, 48 million homeowners had an average of $206,000 worth of equity to tap into, up from $185,000 one year earlier.

The biggest factor behind the rise in equity has been the relentless pace of home price appreciation since the pandemic. Unfortunately, this has created a market of haves versus have-nots.

“Such strong price gains continue to plague would-be buyers in today’s higher-rate environment, but for existing homeowners, the picture keeps growing brighter,” said Andy Walden, ICE’s vice president of enterprise research strategy.

Although homeownership pays off for average Americans, the cost of maintaining a property isn’t cheap and doesn't necessarily make for a good investment on its own.

The true cost of homeownership

Owning a home isn’t just about saving up for a down payment and making monthly mortgage payments. Things like maintenance costs, homeowner insurance, property tax, and personal mortgage insurance also add up.

According to a new study by Creditnews Research, the typical American who purchased a property in 2000 has paid an average of $454,092 to maintain their home.

Of that total, only 22.7% actually went toward paying down the principal balance.

By far, the largest expense was mortgage interest, which accounted for 30.9% of total homeownership expenditures over that period.

Despite these massive costs, homeownership still paid dividends, as a typical owner accrued $376,722 in equity. Compared to renting, homeowners saved a whopping $289,110 in housing costs between 2000 and 2023.

Buying a home often pays off in the long run because it acts as a form of “forced savings” that allows families to accumulate wealth.

Combined with rising property prices, the built-up equity acts as “a catalyst for building wealth for people from all walks of life,” said Lawrence Yun, chief economist at the National Association of Realtors.

A Mynd consumer insights report revealed that 78% of Americans still associate owning a home with the American Dream. Nearly two-thirds (65%) said homeownership is a means for building intergenerational wealth.