The Power of Equity in Homeownership

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It seems like in every aspect of our lives things are trending up: mortgage rates, housing prices, rent growth, gas, groceries. And there is no way to know when this will turn around.

One of the things that is going up is equity. Homeowners are proving to have the most amount of equity in their homes compared to recent history.

According to CoreLogic, homeowners gained over $3.2 trillion in home equity in 2021. The average annual equity game was $55,300 per borrower. This information was released in Q4 of last year.

This falls in line with U.S. home prices rising by 18% year over year in Q4 of 2021. That is up from 8% the year prior. Home appreciation rose by 19.1% in the same amount of time.

Home equity can be used in many ways. First, you want to think about using that equity to diversity your wealth. Taking out your equity and putting that money into other investments can help you grow in any type of investment season. Secondly, if you are experiencing debt, it’s a good time to use that equity to pay off the debt like student loans, credit card debt, car loans, etc. This helps build your credit and lowers your overall monthly expenses.

This is all happening as rents across the nation are rising as well. Rent inflation rose 4.2% (highest since 2007) and had a 0.6% increase month-over-month. This is the highest level since 1987. These numbers are coming from the Consumer Price Index.

Single-family rent took the lead as the highest growth for the 10th straight month. That is up 12.6% from a year ago. Although it may seem like renting is what is affordable, talk to us today. You would be surprised at home much you can qualify for while saving money compared to renting.

The Federal Reserve is planning on a 25-basis point interest-rate hike this week. Things are going to start changing even more. It’s time to make moves now.