Housing Market Gains More Value

Home prices have increased significantly over the last year, which in turn has grown the net worth of homeowners. Appreciation and home equity are directly linked – as the value of a home increases, so does a homeowner’s equity. And with these recent gains, homeowners are witnessing their financial stability and well-being grow to record levels. 

In more good news for homeowners, the most recent Home Price Expectations Survey – a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists – forecasts home prices will continue appreciating over the next five years, adding to the record amount of equity homeowners have already gained over the past year. Below are the expected year-over-year rates of home price appreciation from the report:

What Does This Mean for Homeowners?

Home prices are climbing today, and the data in the survey indicates they’ll continue to increase, but at rates that approach a more normal pace. Even still, the amount of household wealth a homeowner stands to earn going forward is substantial. This truly becomes clear when we consider a scenario using a median-priced home purchased in January of 2021 and the projected rate of appreciation on that home over the next five years. As the graph below illustrates, a homeowner could increase their net worth by a significant amount – over $93,000 dollars by 2026.

Home Price Appreciation and Home Equity

It shows an average annual gain of $33,400 per borrower over the past 12 months.

The expected, sustained growth of home prices means homeowners can continue to build on the past year’s record levels of home equity – and their financial prosperity. It also presents today’s homeowners with a unique opportunity: using their growing equity for a home upgrade. With so few homes available to purchase and strong buyer demand, there may not be a better time to sell your house and move into one that better meets your needs.

Home prices are expected to continue appreciating over the next five years, and the associated equity gains are the quickest way homeowners can build household wealth.

When will it end? Any increases in interest rates will cut into affordability and decrease sales. Prices generally lag sales, so if sales do suffer, the market could see significant cooling of prices in the coming months.

If you’re a current homeowner who’s ready to take advantage of your built-up equity, don't miss out on this rare opportunity to get the most of your home's equity! If you're waiting on the sidelines, I've got answers to any objections you may have. Let's connect today to discuss your options.

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