Friday, December 23, 2022 / by Laura Larson
Due to the sharply growing home prices over the past few years, if you are a homeowner, your net worth has significantly increased. Even when the market softens, here's how it happened and what it means for you.
First of all, remember that our home's equity is its current value less any loan balance.
Over the past several years, there was a big mismatch between the number of homes for sale and the number of people looking to buy, which led to a large increase in property prices. And while this year's rate of home price growth has slowed down somewhat in some overheated markets, it doesn't necessarily indicate that you have lost all of the equity you accrued during the epidemic frenzy.
According to CoreLogic's most recent Homeowner Equity Insights report, the average homeowner's equity has increased by $34,300 over the past 12 months, demonstrating that you still have usable cash available.
That's right, despite the news stories, the typical homeowner increased their equity over the previous year in almost all markets. Due to a reduction in property prices, the gains aren't as pronounced as they were in the previous quarter, but they are still substantial. Furthermore, if you've lived in your house for more than a year, there's a good probability that you have more equity than you think.
Why It's So Vital at This Time
Equity can assist you in achieving other objectives, such as purchasing your next house, in addition to helping you enhance your overall net worth. The equity you've built up in your present home is returned to you when you sell it, and it can be just what you need to pay for most or even all of the down payment on your next home.
Therefore, if you've been putting off selling because you weren't sure what the headlines would entail for your financial situation, rest assured that you've built some solid equity recently, which can support your decision.