Homeowners Have Gained $28K in Equity Over the Past Year

If you're a homeowner, your net worth has likely seen a significant boost over the past year. Home prices have been on the rise, accelerating the pace at which you build equity in your home. Here's a breakdown of how this works.

Understanding Home Equity

Equity is the difference between your home's current market value and the remaining balance on your mortgage. It's essentially the portion of your home that you truly "own." There are several factors that contribute to the growth of home equity:

1. Paying Down Your Mortgage: Each mortgage payment you make reduces the principal balance owed on your loan. Over time, as you pay down your mortgage, your equity increases.

2. Rising Home Values: When the market value of your home increases, so does your equity. This can happen due to overall market trends, improvements you make to the property, or other factors that enhance your home's value.

3. Initial Down Payment: The larger your down payment when you purchase your home, the more equity you start with. For instance, if you put down 20% on your home, you begin with 20% equity.

4. Refinancing and Home Equity Loans: Sometimes homeowners refinance their mortgages or take out home equity loans. While this can provide access to cash, it's important to understand how these actions can impact your overall equity.

5. Economic Conditions: Factors such as inflation, interest rates, and the broader economy can also influence home values and, consequently, your equity.

The Equity Boom

Over the past year, the demand for homes has outstripped the available supply, driving up home prices. This increase in home prices has directly translated into growing equity for homeowners.

How Much Equity Have You Earned Over the Past 12 Months?

According to the latest Homeowner Equity Insights from CoreLogic, the average homeowner has seen their equity grow by $28,000 in the past year alone. This figure represents the national average. For a detailed look at equity growth in your specific state, you can check out this link How Much Is My Home Worth

What If You Bought Your House Before the Pandemic?

For those who purchased their homes before the pandemic, the equity increase is even more pronounced. Realtor.com data shows that home prices surged by 37.5% from May 2019 to May 2024, leading to substantial gains in home value. Ralph McLaughlin, Senior Economist at Realtor.com, states:

“Homeowners have seen extraordinary gains in home equity over the past five years.”

To provide more context, Selma Hepp, Chief Economist at CoreLogic, discusses the total equity typical homeowners have amassed:

“With home prices continuing to reach new highs, owners are also seeing their equity approach the historic peaks of 2023, close to a total of $305,000 per owner.”

How Your Rising Home Equity Can Benefit You

The significant increase in home prices in recent years, combined with ongoing growth, means homeowners now have considerable equity. This equity can be incredibly beneficial.

You can leverage it to start a business, fund education, or even facilitate the purchase of your next home. When you sell your home, the accumulated equity returns to you and may cover a large portion, or even all, of your next home's down payment.

For personalized advice and to explore the best options in your local market, contact our experienced team at PCS Home Group. With our knowledge, experience, and dedication to client satisfaction, PCS Home Group is your trusted partner for a seamless transition. Whether you're moving across the country or just down the street, PCS Home Group is here to help you every step of the way.

At PCS Home Group, we understand the unique challenges that come with relocating, especially for military families undergoing PCS (Permanent Change of Station) transitions. Founded by military spouses, our team is dedicated to making your PCS transition as seamless as possible. Whether you're buying, selling, investing, in need of property management services, or a rental, our expertise and personalized approach ensure that your transition is smooth and stress-free.

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-PCS Home Group-