How Much Home Equity Have You Gained? The Answer Might Surprise You
Have you ever stopped to think about how much wealth you’ve built up just from being a homeowner? As home values rise, so does your net worth. And, if you’ve been in your house for a few years (or longer), there’s a good chance you’re sitting on a pile of equity — maybe even more than you realize. What Is Home Equity? Home equity is the difference between what your house is worth and what you owe on your mortgage. For example, if your house is worth $500,000 and you still owe $200,000 on your home loan, you have $300,000 in equity. It’s essentially the wealth you’ve built through homeownership. Right now, homeowners across the country are seeing record amounts of equity. According to Intercontinental Exchange (ICE), the average homeowner with a mortgage has $319,000 in home equity. Why Have Homeowners Gained So Much Equity? The rise in home equity over the years can be credited to two key factors: 1. Significant Home Price Growth Home prices have climbed dramatically in recent years. In fact, according to the Federal Housing Finance Agency (FHFA), over the past five years, home prices nationwide have risen by 57.4% (see map below): This appreciation means your house is likely worth much more now than when you first bought it. 2. Longer Tenure in Homes Data from the National Association of Realtors (NAR) shows people are staying in their homes for a decade (see graph below): This increased tenure means homeowners benefit even more from home values growing over time. That’s because the longer someone has lived in their house, the more that home’s value has grown, which directly increases equity. And if you’re one of those people who’s been in their home for 10 years or more, know this – according to NAR: “Over the past decade, the typical homeowner has accumulated $201,600 in wealth solely from price appreciation.” The Benefits of Having Home Equity What does that mean for you? It means your house might be your biggest financial asset — and it could open up some exciting opportunities for your future. Let’s break it down. Moving to Your Next Home Your equity could help you cover the down payment for your next home. In some cases, it might even mean you can buy your next house all cash. Financing Home Improvements Thinking about upgrading your kitchen, adding a home office, or tackling other projects? Your equity can provide the funds to make those improvements happen, increasing your home’s value and making it more enjoyable to live in too. Getting a Business Going If you’ve been dreaming about starting your own business, your equity could be the kickstart you need. Whether it’s for startup costs, equipment, or marketing, leveraging your home’s value can help bring your entrepreneurial goals to life. Bottom Line Whether you’re thinking about selling, upgrading, or simply want to understand your options, your home equity is a powerful resource. If you’re wondering how much equity you’ve built or how you can use it to meet your goals, let’s connect and explore the possibilities.
What Will It Take for Prices To Come Down?
You may be wondering if home prices are going to crash. And believe it or not, some people might even be hoping this happens so they can finally purchase a more affordable home. But experts agree that's not what's in the cards – and here's why. There are more people who want to buy a home than there are homes available to purchase. That’s what drives prices up. Let’s break that down and explore why, nationally, home prices aren’t going to be coming down anytime soon. Prices Depend on Supply and Demand The housing market works like any other market – when demand is high and supply is low, prices rise. According to the latest estimates, the U.S. is facing a housing shortfall of several million homes. That means there are far more people looking to buy (demand) than there are homes for sale (supply). That mismatch is the key reason why prices won’t fall at the national level. As David Childers, President of Keeping Current Matters (KCM), puts it: “The main driving force on pricing is the limited amount of inventory in most markets across the country. That issue is not going to be solved overnight or in the next twelve months.” How Did We Get Here? For over 15 years, homebuilders haven’t been building enough homes to keep up with buyer demand. After the 2008 housing crisis, homebuilding slowed significantly, and it’s only recently started to recover (see graph below): Even with new construction on the rise over the past few years, builders are playing catch-up. And according to AmericanProgress.org, they’re still not even keeping up with today’s demand, let alone making up for years of underbuilding. And as long as there’s a housing shortage, home prices will remain steady or increase in most areas. What About Next Year? The majority of experts agree prices will keep rising next year, but at a much slower, healthier pace (see graph below): But it’s important to note home prices vary by market. What happens nationally might not reflect exactly what’s happening in your area. If your local market has more inventory available, prices could grow more slowly or even decline slightly. But in areas where inventory remains tight, prices will keep climbing – and that’s what’s happening throughout most of the country. That’s why it’s crucial to work with a local real estate expert who understands your market and can explain what’s going on where you live. Bottom Line If you’re wondering what it’ll take for prices to come down, it all goes back to supply and demand. With inventory still limited in most markets, prices are likely to remain steady or rise. To see what’s happening with home prices where we live, let’s connect. That way you’ll have help understanding our market and making a plan that works for you.
More Homes, Slower Price Growth – What It Means for You as a Buyer
There are more homes on the market right now than there have been in years – and that could be a game changer for you if you’re ready to buy. Let’s look at two reasons why. You Have More Options To Choose From An article from Realtor.com helps explain just how much the number of homes for sale has gone up this year: “There were 29.2% more homes actively for sale on a typical day in October compared with the same time in 2023, marking the twelfth consecutive month of annual inventory growth and the highest count since December 2019.” And while the number of homes on the market still isn’t quite back to where it was in the years leading up to the pandemic, this is definitely an improvement (see graph below): With more homes available for sale now, you have more options to choose from. As Hannah Jones, Senior Economic Research Analyst at Realtor.com, explains: “Though still lower than pre-pandemic, burgeoning home supply means buyers have more options . . .” That means you have a better chance of finding a house that meets your needs. It also means the buying process doesn’t have to feel quite as rushed, because more options on the market means you’ll likely face less competition from other buyers. Home Price Growth Is Slowing When there aren’t many homes for sale, buyers have to compete more fiercely for the ones that are available. That’s what happened a few years ago, and it’s what drove prices up so quickly. But now, the increasing number of homes on the market is causing home price growth to slow down (see graph below): In certain markets, the number of available homes has not only bounced back to normal, but has even surpassed pre-pandemic levels. In those areas, home price growth has slowed or stalled completely. As Lance Lambert, Co-Founder of ResiClub, explains: “Generally speaking, housing markets where active inventory has returned to pre-pandemic 2019 levels have seen home price growth soften or even decline outright from their 2022 peak.” Slower or stalled price growth could give you a better chance of finding something within your budget. As Dr. Anju Vajja, Deputy Director at the Federal Housing Finance Agency (FHFA), says: “For the third consecutive month U.S. house prices showed little movement . . . relatively flat house prices may improve housing affordability.” But remember, inventory levels and home prices are going to vary by market. So, having a real estate agent who knows the local area can be a big advantage. They can help you understand the trends in your community, which can make a real difference in finding a home that fits your needs and budget. Bottom Line More housing options – and the slower home price growth they bring – can help you find and buy a home that works for your lifestyle and budget. So don’t hesitate to reach out if you want to talk about the growing number of choices you have right now.
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