It has long been said that purchasing a home is one of the safest financial investments you can make. You first largely build home equity via your down payment, then as you pay off your mortgage. Property value increases and home upgrades can increase your ownership stake too. Let's take a closer look at what equity is and how it has increased over the last 30 years.
Equity is the current value of your home minus what you still owe on your loan. Your equity goes up when you pay down your loan. Your equity also increases, often more rapidly, as home values rise and your home appreciates in value. The graphic above shows how home price appreciation has increased wealth over time throughout the United States.
Since the first quarter of 1991, the national average shows that home wealth has increased an average of 300%. On the West coast, this number is even higher, averaging nearly 350%. Although it's not broken down further, the East Bay tends to be well above regional averages.
On average, people who bought their homes 32 years ago have seen their homes nearly triple in value over the years. Even though there have been ups and downs in the real estate market during this time, a recent poll by Fannie Mae showed that over 70% of respondents believe buying a home is a safe investment.
Now is a great time for first time home buyers to start building their home equity. But what if you already own a home with established equity? No problem, there is always room to grow your equity! Perhaps you can purchase an investment property to further your real estate portfolio or upgrade to a house of larger value. Need more ideas on how to use your equity? Take a look at this blog post
here. At Arrive Real Estate Group, we are happy to discuss any potential or impending moves. Contact us today to discover the difference and learn how we can help you!
