Let’s talk about something you might not check nearly as often as your bank account – and that’s how much your home is worth. But when it comes to your financial situation, it’s an important thing to remember. When’s the last time you had a professional show you the value of your home?
Think about it. For most people, your house is probably the biggest asset you have. And if you’ve owned your home for a few years (or longer), chances are it’s been quietly building wealth for you in the background. And honestly? You might be surprised by just how much.
What Is Home Equity?
This wealth you may not even realize you have comes in the form of home equity. Home equity is the difference between what your house is worth and what you still owe on your mortgage. It grows over time as home values rise and as you pay down your mortgage each month. Here’s an example to help you really understand how this works.
Let’s say your house is now worth $1,000,000, and you have $600,000 left to pay off on your loan. That means you have $400,000 in equity. And most homeowners are sitting on some pretty significant equity right now.
According to Cotality (formerly CoreLogic), the average homeowner with a mortgage has about $311,000 in equity.
Why You Probably Have More Than You Think
Here are the two main reasons homeowners like you have record amounts of equity right now:
1. Significant Home Price Growth. According to the Federal Housing Finance Agency (FHFA), home prices have jumped by more than 57% nationwide over the last five years (see map below):
And if you purchased your home a few years ago (or more), this means your house is likely worth much more now than when you first bought it, thanks to how much prices have climbed lately.
2. People Are Living in Their Homes Longer. Data from the National Association of Realtors (NAR), shows the average homeowner stays in their home for about 10 years now (see graph below):
That’s longer than it used to be. And over that decade? You’ve built equity just by making your mortgage payments and riding the wave of rising home values.
So, if you’re one of those people who’s been in their home for that long, here’s how much the behind-the-scenes price growth has helped you out. According to NAR:
“Over the past decade, the typical homeowner has accumulated $201,600 in wealth solely from price appreciation.”
What Could You Actually Do with That Equity?
Remember, your house might be your biggest financial asset – and, if you’re smart about how you leverage your equity, it could open up some exciting opportunities for your future.
- Use it to help buy your next home. Your equity could help you cover the down payment on your next home. In some cases, it might even mean you can buy your next house in all cash.
- Renovate your current house to better suit your life now. And, if you’re strategic about your projects, they could add even more value to your home if you do sell later on.
- Start the business you’ve always dreamed of. Your equity could be exactly what you need for startup costs, equipment, or marketing. And that could help increase your earning potential, so you’re getting yet another financial boost.
Bottom Line
Chances are, your house is worth a lot more than you realize. Whether you’re thinking about selling, upgrading, or simply want to understand your options, your equity isn’t just a number. It’s a tool.
If you sold your house and had significant equity to work with, what would you do with it? Connect with Stovall Team today to figure out how to turn your home’s value into your next big move. Let’s connect at 714.343.9294 [email protected]
A Tale of Two Housing Markets: What does it all mean? Stovall Team Answers Your Questions
For a long time, the housing market was all sunshine for sellers. Homes were selling quickly, and buyers had to compete like crazy. But lately, things are starting to shift. Pockets within our area are still super competitive for buyers but we are seeing more homes sit on the market, giving buyers a bit more breathing room.
In other words, it’s a tale of two markets, and knowing which one you’re in makes a huge difference when you move. Stovall Team knows the local market and will help you navigate our current conditions.
What Is a Buyer’s Market vs. a Seller’s Market?
In a buyer’s market, there are a lot of homes for sale, and not as many people buying. With fewer buyers competing for these homes, that means they generally sit on the market longer, they might not sell for as much as they would in a seller’s market, and buyers have more room to negotiate.
On the flip side, in a seller’s market, there aren’t enough homes for sale for the number of buyers who are trying to purchase them. Homes sell faster, sellers often get multiple offers, and prices shoot higher because buyers are willing to pay more to win the home.
The Market Is Starting To Balance Out
In a more balanced or neutral market, homes tend to stay on the market a little longer, bidding wars are less common, and sellers may need to make more concessions – like price reductions or helping with closing costs. That shift gives today’s buyers more opportunities and less competition than a couple of years ago.
Why Are Things Changing?
Inventory plays a big role. When there are more homes for sale, buyers have more options – and that cools down home price growth.
The South and West regions of the U.S. have seen big jumps in housing inventory in the past year. Both are almost back to pre-pandemic levels. That’s why more buyer’s markets are popping up there. But in the Northeast and Midwest, inventory is still very low compared to pre-pandemic. That means those areas are more likely to stay seller’s markets for now.
What This Means for You
Every local market is different. Even if the national headlines say one thing, your town – even your neighborhood will be telling a totally different story.
Knowing which type of market you’re in helps you make smarter decisions for your move. That’s why working with a local real estate agent is so important right now. Call Stovall Team today 714.343.9294. Micah Stovall is an expert on our local market, he will craft your buying or selling strategy specifically tailored to local market conditions. Stovall Team understand the unique trends in your area and can help you make the best choices, whether you’re buying or selling. With our expert strategies, you can move no matter which way the market is leaning, because we know how to navigate various levels of buyer competition, how to find hidden gems locally, how to price your house properly and how to negotiate based on who has more leverage, and more.
Bottom Line
If you’re ready to make a move, or even just thinking about it, connect with Stovall Team at 714.343.9294, Micah would love to help you understand your local market and create a game plan that works for you.