This market is certainly unlike any we have seen before. Not only are interest rates historically low but there are a number of factors that have converged at once, making real estate sales soar all across the United States. The pandemic, working from home, children not in school, not being tethered to one area because of commute times, the need for in-home office spaces, the desire for more green space, a stronger desire to be near family after lockdowns made travel so difficult……these are just a handful of reasons that we are seeing an increase in activity in home sales and prices. Some sellers are putting the equity they have in their homes to work for them but we are getting a lot of questions about the market stability moving forward. What is our take on the Real Estate Market Forecast?
Appreciation and home equity are directly linked. As the value of a home increases, so does a homeowner’s equity. With recent value appreciation, homeowners are witnessing their financial stability grow to record levels. Will this continue?
The most recent Home Price Expectations Survey predicts that home prices will continue appreciating over the next five years. This survey poles over one hundred economists, real estate experts, and investment and market strategists. The Real Estate Market Forecast shows expected year-over-year appreciation rates between 3.33% and 8.66%.
Home prices are climbing today. The data in the survey indicates that they will continue to increase, but at rates that approach a more normal pace. The amount of household wealth a homeowner stands to earn over the next five years is substantial. This becomes clear when we consider a scenario using a median-priced home purchased in January of 2021. As the graph below illustrates, a homeowner could increase their net worth by a significant amount – over $93,000 dollars by 2026. Buying now, although the market is so active, could really have a positive impact on overall gains. Selling now and taking advantage of the market conditions can allow for using the increased equity to purchase a larger home, lower payments or purchase investments.
CoreLogic recently released their quarterly Homeowner Equity Insights Report, which tracks the year-over-year increases in equity. It shows an average annual gain of $33,400 per borrower over the past 12 months. In the report, Dr. Frank Nothaft, Chief Economist for CoreLogic, further explains:
The expected, sustained growth of home prices means homeowners can continue to build on the past year’s record levels of home equity. This means an increase in financial prosperity. 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.
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.