How Your Equity Can Grow over Time
It’s true that record levels of home price appreciation have spurred significant equity gains for homeowners over the past few years. As Diana Olick, Real Estate Correspondent at CNBC, says:“The stunning jump in home values over the course of the Covid-19 pandemic has given U.S. homeowners record amounts of housing wealth.”That’s great for your home’s value over the last couple of years, but what if you’ve lived in your home for longer than that? You may be wondering how much equity you truly have.The National Association of Realtors (NAR) has done a study to calculate the typical equity gains over longer spans of time. The data they compiled could be enough to motivate you to move. Just remember, to find out how much equity you have in your specific home, you’ll want to get a professional equity assessment from a trusted real estate advisor.How Your Equity Grows Let’s start by establishing how you build equity in your home. While price appreciation is clearly a factor that can help boost your equity, you also build equity over time as you pay down your home loan. NAR explains:“Home equity gains are built up through price appreciation and by paying off the mortgage through principal payments.”Average Equity Growth over TimeThe study from NAR breaks down the typical equity gain over time (see graph below). It calculates the equity a homeowner potentially gained if they purchased the median-priced home 5, 10, or 30 years ago and still own it today.These six-figure numbers are impressive and certainly enough to help you fuel a move into your next home, but they’re not a promised amount. Remember, your own equity gain will be different. It depends on how long you’ve been in the house, your home’s condition, any upgrades you’ve made, your area, and much more.If you want to find out how much equity you have, partner with a trusted real estate professional for an equity assessment on your home. They can provide an expert opinion on what your house is worth today and how the equity you’ve gained over time can help you when you purchase your next home. It may be some (if not all) of what you need for your next down payment.Bottom LineIf you’re thinking about selling your house and making a move, home equity can be a real game-changer, especially if you’ve been in your current home for a while. If you’re ready to find out how much equity you have, let’s connect.
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Is Homeownership Still the American Dream?
Defining the American dream is personal, and no one individual will have the same definition as another. But the feelings it brings about – success, freedom, and a sense of prosperity – are universal. That’s why, for many people, homeownership remains a key part of the American dream. Your home is your stake in the community, a strong financial investment, and an achievement to be proud of.A recent survey from Bankrate asked respondents to rank achievements as indicators of financial success, and the responses prove that owning a home is still important to so many Americans today (see graph below):As the graph shows, homeownership ranks above other significant milestones, including retirement, having a successful career, and earning a college degree.That could be because owning a home is a significant wealth-building tool and provides meaningful financial stability. The National Association of Realtors (NAR) explains:“Homeownership builds financial security. With 65.5% of Americans owning homes, the net worth of a typical homeowner is nearly 40 times the net worth of a non-owner.”There are other ways your home acts as more than just a roof over your head, too. The Mortgage Reports highlights a few of the many benefits homeowners enjoy, including:Your equity (and wealth) grows through home price appreciation.Your housing costs are fixed – and that can help combat rising costs from inflation.You’ll have greater privacy and the opportunity to customize your living space.Plus, homeowners tend to be more active in their community. Like NAR says:“Living in one place for a longer amount of time creates and [sic] obvious sense of community pride, which may lead to more investment in said community.”What Does That Mean for You?If your definition of the American Dream involves greater freedom and prosperity, then homeownership could play a major role in helping you achieve that dream. When you set out to buy, know there are incredible benefits waiting for you at the end of your journey. You’ll have a place you can call your own, feel most comfortable, and grow your wealth.First American puts it best, saying:“Homeownership remains central to the pursuit of the American Dream. It is a critical driver of economic mobility, delivering financial and social advantages. . . .”Bottom LineBuying a home is a powerful decision and a key part of the American Dream. And if homeownership is part of your personal dreams this year, let’s connect and start the process today.
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