A recent article from a reputable news source was titled: Here’s why some homeowners still can’t sell. In the opening bullets of the article, the author claimed, “Negative equity is one of the main reasons why there are so few homes for sale.” The article then goes on to soften that stance but we want to bring better clarity to the equity situation.
A recent report from CoreLogic (which was quoted in the article) revealed that over 80% of all homes now have “significant equity,” which means the home has over 20% equity. That level of equity allows the homeowner to sell their home if they so desire. (There was no reference to significant equity in the article.)
If eight out of ten homeowners now have significant equity in their homes, it is hard to make the claim that lack of equity is “one of the main reasons why there are so few homes for sale.”
Here is a map showing the percentage of homes in each state which currently have significant equity:
If you are one of many homeowners who is debating selling your home and are wondering how much equity you have accumulated, let’s get together to determine if now is the time to list.
Do You Know How Much Equity You Have in Your Home?
CoreLogic’s latest Equity Report revealed that 91,000 properties regained equity in the first quarter of 2017. This is great news for the country, as 48.2 million of all mortgaged properties are now in a positive equity situation. Home Buying Checklist
Price Appreciation = Good News for Homeowners
Frank Nothaft, CoreLogic’s Chief Economist, explains: Home Buying Checklist
“One million borrowers achieved positive equity over the last year, which means risk continues to steadily decline as a result of increasing home prices.” Home Buying Checklist
Frank Martell, President and CEO of CoreLogic, believes this is a great sign for the market in 2017 as well, as he had this to say:
“Homeowner equity increased by $766 billion over the last year, the largest increase since Q2 2014. The rising cushion of home equity is one of the main drivers of improved mortgage performance. Since home equity is the largest source of homeowner wealth, the increase in home equity also supports consumer balance sheets, spending and the broader economy.” Home Buying Checklist
This is great news for homeowners! But, do they realize that their equity position has changed?
The Importance of Home Equity in Retirement Planning
We often discuss the difference in family wealth between homeowner households and renter households. Much of that difference is the result of the equity buildup that homeowners experience over the time that they own their home. In a report recently released by the nonpartisan Employee Benefit Research Institute (EBRI), they reveal how valuable equity can be in retirement planning. Home Buying Checklist
Craig Copeland, Senior Research Associate at EBRI, recently authored a report, Importance of Individual Account Retirement Plans and Home Equity in Family Total Wealth, in which he reveals: Home Buying Checklist
Home Equity: You Actually Have More Than What You Think
In the last quarter of 2015, more than 759,000 properties had regained equity. What does this indicate? Basically, almost 91% of all mortgaged properties managed to land the positive equity position a lot of homeowners are aiming for.
To support that, according to the president and CEO of CoreLogic, Anand Nallathambi, for much of the country, the negative equity epidemic is improving and changing for the better. This was made possible because of the continuous rise in home prices for the past 3 years– it serves as an indication that the money flows have increased, while the housing stock’s ratio declined.
No doubt, a lot of homeowners would agree that this is good news. However, are they even aware that because of this, their equity position also changed? Home Buying Checklist