“One of the often-overlooked benefits of rising home prices is the positive impact they have on home equity.”
Over the last couple of years, we’ve heard quite a bit about rising home prices. Today, expert projections still forecast continued growth, just at a slower pace. One of the often-overlooked benefits of rising home prices is the positive impact they have on home equity. Let’s break down three ways this is a win for homeowners.
1. Move-Up Opportunity
With the rise in prices, homeowners naturally experience an increase in home equity. According to the Homeowner Equity Insights from CoreLogic,
“In the first quarter of 2019, the average homeowner gained approximately $6,400 in equity during the past year.”
This increase in profit means if homeowners decide to sell, they’ll be able to put their equity to work for them as they make plans to move up into their next home.
2. Gain in Seller’s Profit
ATTOM Data Solutions recently released their Q2 2019 Home Sales Report, indicating the seller’s profit jumped at one of the fastest rates since 2015. They said:
“A look at the national numbers showed that U.S. homeowners who sold in the second quarter of 2019 realized an average home price gain since the original purchase of $67,500…the average home seller gain of $67,500 in Q2 2019 represented an average 33.9 percent return as a percentage of the original purchase price.”
Looking at the amount paid when they bought their homes, and then the amount they received after selling, we can see that some homeowners were able to walk away with a significant gain.
3. Out of a Negative Equity Situation
Negative equity occurs when there is a decline in home value, an increase in mortgage debt, or both. Many families experienced these challenges over the last decade. According to the same report from CoreLogic,
“U.S. homeowners with mortgages (roughly 63% of all properties) have seen their equity increase by a total of nearly $485.7 billion since the first quarter 2018, an increase of 5.6%, year over year.
In the first quarter of 2019, the total number of mortgaged residential properties with negative equity decreased…to 2.2 million homes, or 4.1% of all mortgaged properties.”
The good news is, many families have moved beyond a negative equity situation, and no longer owe more on their mortgage than the value of their home.
Bottom Line
If you’re a current homeowner, you may have more equity than you realize. Your equity can open the door to future opportunities, such as moving up to your dream home. Let’s get together to discuss your options and start to put your equity to work for you.
To view original article, visit Keeping Current Matters.
How the Economy Impacts Mortgage Rates
Mortgage rates will continue to be volatile in the months ahead. There are signs the economy is headed in the better direction.
How Affordability and Remote Work Are Changing Where People Live
An experienced local agent can help you find the lifestyle you’re looking for in a home you can afford.
Unlocking Homebuyer Opportunities in 2024
If you’re ready and able to buy, you may find that the second half of 2024 is a bit easier to navigate.
How To Determine if You’re Ready To Buy a Home
While housing market conditions are definitely a factor in your decision, your own personal situation and your finances matter too.
Why Working with a Real Estate Professional Is Crucial Right Now
A real estate expert can carefully walk you through the whole real estate process and advise you on the best ways to achieve success.
Why Moving to a Smaller Home After Retirement Makes Life Easier
As you approach retirement, its important to think about whether your current home still fits your needs.