Home Price Appreciation through 2025
When it comes to the current housing market everyone knows that home prices have increased significantly over the last year, and of course that means that the overall net worth for homeowners has increased also. Appreciation and home equity are directly linked - as the value of a home increases, so does a homeowner’s equity. With the recent trends in the housing market, this increase has given homeowners unprecedented financial stability in record levels.
To add even more to this for homeowners, the most recent Home Price Expectations Survey – a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists - “forecasts home prices will continue appreciating over the next five years, adding to the record amount of equity homeowners have already gained over the past year”. Just take a look at the expected year-over-year rates of home price appreciation derived from the report:
What is the significance for Homeowners?
It shows that not only are home prices continuing to rise throughout the end of the year, but they will also continue to increase throughout the next few years, however, it will start to approach a rate of normalcy according to the data retrieved from the survey. With that being said, the aggregate household wealth that homeowners are set to earn moving forward is substantial. This can be seen clearly when we take into consideration a scenario using a median-priced home purchased earlier in the year (2021) in January and the projected rate of appreciation on that home over the next five years. As the graph illustrates, a homeowner could potentially increase their net worth by a substantial amount in excess of $93,000 by 2026.
Home Price Appreciation and Home Equity
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. Within the report Chief Economist for CoreLogic, Dr. Frank Nothaft, states:
“Double-digit home price growth in the past year has bolstered home equity to a record amount. The national CoreLogic Home Price Index recorded an 11.4% rise in the year through March 2021, leading to a $216,000 increase in the average amount of equity held by homeowners with a mortgage.”
This continuation of sustained growth of home prices results in homeowners being able to build on the past year’s record levels of home equity, as well as their financial prosperity. This growth in equity for homeowners allows them to possibly make home upgrades as well. With such low inventory levels of homes available for purchase and increasing buyer demand, there may not be a better time to sell your current home and upgrade into one that suits your needs better.
To sum it all up:
Home prices are not expected to stop appreciating anytime soon over the next five years, and the equity gains associated with this positive trend is the fastest way homeowners can build household wealth. If you’re ready to take advantage of this positive trend in the market let’s connect today and our team of professionals can discuss your options!