Article Source: National Association of Realtors RealtorMag
Home owners are increasingly optimistic about gaining equity in their homes this year, but they’re still conservative on how much they’ve truly gained.
Forty-six percent of home owners with a mortgage say they believe they’ll see their equity increase in 2016, and the majority expect to see a gain by as much as 10 percent, according to a new study of 1,000 home owners conducted by the lender loanDepot.
Indeed, about a quarter of home owners surveyed say they expect their equity to increase between 6 and 10 percent this year while 58 percent say they expected equity to increase 1 to 5 percent. Economists have largely predicted equity gains to be between 2.3 and 4.7 percent this year.
Despite the equity optimism, 80 percent of home owners underestimate the amount of value their home has gained since the housing recovery, according to the loanDepot survey.
“Home owners who bought during the housing boom are regaining equity many thought was lost forever, yet too many are not aware of the equity they have gained or they are unclear about how to determine changes in their equity,” says Bryan Sullivan, chief financial officer of loanDepot, LLC. “People who bought after the housing boom when prices were low are realizing home ownership can be a great investment and an asset that they can now leverage through equity to realize many dreams. Whether they choose to leverage their home equity now or reserve it for future needs, millions of home owners have choices today not available just a few years ago.”
Home owners who purchased their home prior to the housing boom or during it – and who then watched their equity fade during the 2007 to 2009 bust – have different views on the equity picture than home owners who purchased post-2009. For example, the study found that more buyers who purchased after 2009 believe:
- 64% believe their home has gained value since 2013 compared to 58 percent of pre-2009 owners.
- 50% expect to gain more equity this year compared to 43 percent of pre-2009 buyers.
- 65% believe they have adequate equity now to take out a home equity loan compared to slightly over half (52%) of post-2009 buyers.
Source: “Owners Have More Equity Than They Realize.” National Association of Realtors. N.p., 22 Feb. 2016. Web. 1 Mar. 2016. <http://realtormag.realtor.org/daily-news/2016/02/22/owners-have-more-equity-they-realize?om_rid=AAUkqu&om_mid=_BWz2tWB9LDpSK0&om_ntype=NARWeekly>.