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Did homeowner’s equity make money or lose money on their houses this past quarter? The answer might surprise you.
Homeownership, for many, is the cornerstone of the American Dream. While some perceive it merely as a living space, others recognize it as an investment that, over time, may appreciate, depreciate, or even stagnate in value. A crucial factor that every homeowner should be aware of is the equity they hold in their property.
In a recent study by CoreLogic, the numbers revolving around homeowner’s equity presented a fascinating tale of shifts. For those unfamiliar with the term, equity refers to the difference between a property’s market value and the outstanding balance of all liens on the property. It’s essentially the portion of the home that the owner truly “owns.”
In the second quarter, despite the occasional gloomy overcast, there emerged a silver lining. Homeowners with mortgages experienced a dip in their home’s value compared to the previous year, translating to an average drop of $8,300. This might sound a tad disheartening at first glance. However, the following statistic offers solace: comparing the spring season to its colder counterpart, winter, these very homeowners observed a robust 5.2% surge in equity. This increment reflected an average gain of a substantial $13,900!
This oscillation presents a pertinent question: What does this signify for homeowner’s equity as a whole?
To put things in perspective, today, the typical equity cushioning the average US homeowner is an impressive $290,000.
One might wonder, given the fluctuations, is the homeowner’s equity heading towards a precarious path or a promising one? It’s pivotal to understand that while home values did retreat slightly from their zenith in 2022, they comfortably nestle at values surpassing those recorded six months prior. This observation spells optimism for those who embarked on their homeownership journey in spring 2022 when prices soared sky-high.
Shifting our lens westwards, states like Washington and California paint a slightly different picture. Here, the pendulum of homeowner’s equity swung more vigorously, recording the most pronounced drops in home values within this year. However, it’s essential not to get lost in this transient trough. These western states, historically, have contributed significantly to the nation’s total equity. The rapid appreciation of home prices over the preceding decade stands testament to this fact.
Another heartening revelation from the study was the minimal percentage of homeowners (a mere 2%) who are currently underwater on their mortgages. This means that only an infinitesimal fraction of homeowners owes more on their mortgage than the current market value of their home. Reflecting on the past, one can appreciate the magnitude of this improvement; back in 2009, a staggering 26% of homeowners found themselves in this challenging predicament.
One vital takeaway from the CoreLogic study is the realization that dwindling home prices don’t unequivocally correlate with a higher number of homeowners drowning in negative equity. Numerous intertwined factors play their part. Initial down payments, external risks, and market dynamics collectively influence a homeowner’s equity position.
In essence, the homeowner’s equity journey has indeed witnessed its share of ebbs and flows. However, the overarching narrative remains positive, with the majority comfortably positioned concerning their property’s value.
Are you curious about your standing in this equity landscape? Gauge your home’s value and equity here.
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