Increasing Home Equity
Over the past two years, homeowners have seen some tremendous benefits. Whether it is an inflation hedge, a locked-in mortgage rates, or outpacing equity gains, homeowners made out like bandits. For homeowners, there has never been a better time to be in the position you are in. Homeowners benefit from having their own place to live, and they will likely continue to benefit over time. Here is how increasing home equity has made many homeowners wealthier than ever.
For homeowners, your net worth has drastically increased over the past 24 months. With the record low supply for homes coupled with record high demand to buy, home prices have increase dramatically. When home prices increase, homeowners benefit. While this benefit is an on-paper increase, when going to sell, homeowners will get more than ever. Not only will they get more than ever, they will also get the chance to receive multiple offers as well as close in record times. Recent home price appreciation has sent home valuations to record highs, allowing homeowners to build wealth while hiding from housing inflation and renting.
For those who do not know, equity is a powerful tool in the home buying, selling, and owning landscapes. Equity can be described as the current market value of your home, minus the amount you owe towards your loan. When home prices increase, especially at this rate we have seen, your equity increases alongside the home price. As your equity increases, you own more and more of your home over time. With home prices increasing by close to 20% in 2021, and close to 35% since the pandemic, many homeowners saw tremendous wealth gains. While this does not directly correlate to money in your pocket, you can take advantage of your home equity. A lot of people will take loans against their home equity to fund vacations, renovations, business ideas, and more.
Over the past twelve months, we have seen some historical moves in home prices. This is a direct correlation with the increase in homeowner equity in the past few years. While equity is not a new concept, more people have benefitted from it than ever before recently. Over the past twelve months, the average increase in homeowner’s equity across the United States is $55,300. Now, where else can you gain over $55,000 in less than a year without taking risks that you are not prepared to take? Nowhere. Real estate is a primary wealth building step in America, and for those who own their homes, they can agree.
When Equity Helps
When it is time to sell your home, you will get more back than ever before. This is because of the drastic increase in home prices based on the economic principle of supply and demand. There is record high demand in real estate, and the supply of homes on the market is at an all-time low. This trend looks to continue in 2022 as well. Homeowners can expect to make around another 10% in increasing home equity gains in 2022. This is upwardly revised from 6% to start the year. Homeowners can benefit from this and many do not even know it. Owning your home will make you wealthy, and there are few vessels for wealth as safe as real estate.