According to the real estate brokerage firm Redfin, the average homeowner stays in their home longer than they used to. In 2010 a typical homeowner stayed eight years in a home. In 2019, the average was 13 years.
Longer homeownership helps drive increased homeowner equity. It is one of the bright spots of the 2020 real estate market. A recently released Homeowner Equity Insights Report from CoreLogic found that in almost every state, there was an average of 6.5% equity growth over the first quarter of 2019.
Now is an optimal time for homeowners who are ready to sell their houses this year. As your equity grows, selling your home becomes increasingly desirable.
Capitalize on Your Equity
One reason now is a great time to capitalize on equity gain in today’s market is that home equity is a form of forced savings. As home prices rise, your home’s equity can be applied toward the purchase of a new home. CoreLogic explains:
“Over the past ten years, the equity position of homeowners has positively changed as a result of more than eight years of rising home prices. As the economy climbed out of the recession in the first quarter of 2010, 25.9% or 12.1 million homes were still underwater, compared to the first quarter of 2020 when the negative equity share was at 3.4%, or 1.8 million properties. Borrowers have seen an aggregate increase of $6.2 trillion in home equity since the first quarter of 2010, and the average homeowner has gained about $106,100 in equity.”
The CoreLogic analysis found that negative equity of mortgaged residential properties peaked in the fourth quarter of 2009.
Buyers vs. Sellers
The market favors sellers. Inventory is arguably the biggest challenge for buyers in today’s housing market. There are simply more buyers actively looking for homes to purchase than there are sellers selling them, so the scale is tipped in favor of the sellers.
With an increase in equity, many homeowners planning on moving have been able to sell their current houses for an increased profit. They can then reinvest their earnings in a new home. According to ATTOM Data Solutions, curator of the nation’s premier property database, in their Home Sales Report for the second quarter of 2020:
“Home sellers nationwide realized a gain of $75,971 on the typical sale, up from the $66,500 in the first quarter of 2020 and from $65,250 in the second quarter of last year. The latest figure, based on median purchase and resale prices, marked yet another peak level of raw profits in the United States since the housing market began recovering from the Great Recession in 2012.”
If you’re thinking now is the time to make a move, start by determining the equity in your current home. By understanding how much equity you have earned over time can be a key factor in helping you realize the potential profits in your current home and help you achieve your next homeownership goal.
With average home sale profits growing, it’s a great time to leverage your equity and make a move. Right now, the inventory of houses for sale and mortgage rates are historically low. Right now may be the perfect time to sell your home and take one step closer to the home of your dreams.