The Benefits of Growing Equity in Your Home

Over the last couple of years, we’ve heard quite a bitabout rising home prices. Today, expert projections still forecastcontinued growth, just at a slower pace. One of the often-overlookedbenefits of rising home prices is the positive impact they have onhome equity. Let’s break down three ways this is a win forhomeowners.

1. Move-Up Opportunity

With the rise in prices, homeowners naturally experience anincrease in home equity. According to the Homeowner EquityInsights from CoreLogic,

“In the first quarter of 2019, the average homeownergained approximately $6,400 in equity during the pastyear.”

This increase in profit means if homeowners decide to sell,they’ll be able to put their equity to work for them as theymake plans to move up into their next home.

2. Gain in Seller’s Profit

ATTOM Data Solutions recently releasedtheir Q2 2019 Home Sales Report, indicating theseller’s profit jumped at one of the fastest rates since2015. They said:

“A look at the national numbers showed that U.S.homeowners who sold in the second quarter of 2019 realized anaverage home price gain since the original purchase of$67,500…the average home seller gain of $67,500 in Q2 2019represented an average 33.9 percent return as a percentage of theoriginal purchase price.”

Looking at the amount paid when they bought their homes, andthen the amount they received after selling, we can see that somehomeowners 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, anincrease in mortgage debt, or both. Many families experienced thesechallenges over the last decade. According to the same reportfrom CoreLogic,

“U.S. homeowners with mortgages (roughly 63% of allproperties) 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 mortgagedresidential properties with negative equity decreased…to 2.2million homes, or 4.1% of all mortgaged properties.”

The good news is, many families have moved beyond a negativeequity situation, and no longer owe more on their mortgage than thevalue of their home.

Bottom Line

If you’re a current homeowner, you may have more equitythan you realize. Your equity can open the door to futureopportunities, such as moving up to your dream home. Let’sget together to discuss your options and start to put your equityto work for you.