According to an article in OPP Today, nearly half of American homeowners who have a mortgage anticipate that equity in their home will increase this year.
Out of the 46% who expect their equity to rise, 85% think it will go up by 10% while 27% think it will rise between 6% and 10%. Over half of those questioned by the survey from loanDepot think equity will rise between 1% and 5% while the industry is forecasting price increases of between 2.3% and 4.7%. Just 3% of homeowners expect their equity to fall this year while 27% think it will remain exactly the same.
Over the past three years of the housing recovery, 60% have reported equity in their homes has already increased. Two thirds of US homeowners, which is 49 million, have a mortgage on their home. Experts commenting on these figures point out homeowners who bought during the last housing boom are gradually regaining home equity that they may have thought was gone forever. However many of those who have seen house prices increased over the past few years are unclear as to how this will have affected their levels of equity. Those who bought during the financial crisis and who were able to purchase homes at very low prices are now realizing home ownership can be a fantastic investment, providing an asset that can now be leveraged or held in reserve for the future. Now millions of homeowners have additional choices that were not available even just a few years ago.
Although 57% of US homeowners think the value of their property has gone up over the past few years, most have underestimated the amount of appreciation that has been gained during the recovery in the real estate market. Out of those who think their property’s value has increased since 2013, 27% think this increase has been between 1% and 5% but the Case Shiller 20 city index shows prices rose by 10% from November 2013 to November last year. Those who bought property before and during the last boom and who have watched their equity decrease substantially have quite different views on those who bought their property when prices were much lower, after 2009.
A greater number of buyers who bought their property after 2009 thought their home had gained value since 2013 compared to those who bought property before this date. A greater number of buyers who purchased after 2009 expect to gain more equity during 2016 compared to buyers who bought before 2009. This could well be because these newer buyers haven’t experienced the drastic losses of equity compared to those who bought earlier on.