As I am sure you have heard, home prices have increased significantly over the last year. This, in turn, has grown the net worth of homeowners. Awesome, right? Appreciation (or how much your home’s value increases over time) and home equity are directly linked – as the value of a home increases, so does a homeowner’s equity. And with these recent gains, homeowners are witnessing their financial stability and well-being grow to record levels.
In more good news for homeowners (yes, MORE), home prices are forecasted to continue appreciating over the next five years, adding to the record amount of equity homeowners have already gained over the past year. Wow! Want to see what that might look like? See the graph below that shows the expected year-over-year rates of home price appreciation.
What Does This Mean for Homeowners?
So, we know that home prices are climbing and they’ll continue to increase, but, the rate will approach a more normal pace. Even still, the amount of household wealth a homeowner stands to earn going forward is substantial. Too good to be true? Here’s an example that might change your mind. When we consider a median-priced home purchased in January of 2021 and the projected rate of appreciation on that home over the next five years — a homeowner could increase their net worth by over $93,000 dollars by 2026! That’s a lot of pocket change, my friends!
Home Price Appreciation and Home Equity
Another recent report shows an average annual gain of $33,400 per borrower over the past 12 months. The expected, sustained growth of home prices means homeowners can continue to build on the past year’s record levels of home equity – and their financial prosperity. Homeownership, is definitely paying off! It also presents today’s homeowners with a unique opportunity: using their growing equity for a home upgrade (bigger back yard? More home office space? You got it!). With so few homes available to purchase and strong buyer demand, there may not be a better time to sell your current house and move into one that better meets your needs.
Home prices are expected to continue appreciating over the next five years, and the associated equity gains are the quickest way homeowners can build household wealth. If you’re a current homeowner who’s ready to take advantage of your built-up equity, let’s connect today to discuss your options.