Today’s homeowners are sitting on significant equity, even as home price appreciation has eased recently. If you’re a homeowner, your net worth got a boost over the past few years thanks to rising home prices. Here’s what it means for you, even as the market moderates.
How Equity Has Grown in Recent Years
Because of the imbalance between how many homes were for sale and the number of homebuyers in the market over the past few years, home prices appreciated substantially.
And while price appreciation has slowed this year, that doesn’t mean you’ve lost all the equity in your home. The latest Homeowner Equity Insights report from CoreLogic finds the average homeowner’s equity has grown by $34,300 over the past year alone.
And if you’ve been in your home longer than that, chances are you have even more equity than you realize.
While that’s the national number, if you want to know what happened in your area, look at the map below from the Federal Housing Finance Agency (FHFA). It shows, on average, how much home prices have risen over the past five years, which has been a primary driver behind equity growth.
Why This Is So Important Right Now
While equity helps increase your overall net worth, it can also help you achieve other goals, like buying your next home. When you sell your current house, the equity you’ve built up comes back to you in the sale, and it may be just what you need to cover a significant portion – if not all – of the down payment on your next home.
So, if you’ve been holding off on selling, it may be time to find out how much equity you have and how it can help fuel your next move.
All-Cash Dominating NYC
“The top 40 percent of earners are sitting on more than a trillion dollars in extra savings amassed during the early part of the pandemic, per a New York Times article“. According to Redfin, almost a third of U.S. homebuyers purchase with cash rather than financing with a mortgage. Buying real estate with all cash is a trend in big cities, and the NYC metro is no different. According to the report, the level of homes purchased with all-cash has not been seen since 2014. The states depending on NYC local, 31% to 50% of home sales were loan free. Buyers purchasing in NYC are equity and cash rich. The trend is affluent buyers are purchasing with cash since mortgage rates have doubled from a year ago. These buyers have built significant wealth and are avoiding high-interest payments that increase their monthly outlay.
Key Take Away
Homeownership is a long game; if you plan to move, the equity you’ve gained over time can significantly impact you. Let’s connect to find out how much equity you have in your current home and how you can use it to fuel your next purchase.
