Your Homes Value Could Be

The Good News You Need

There is no question that the stock market has entered a period of high volatility and if you have stocks as part of your overall investment strategy you may be gasping for breath. While the stock market has, at least for the most part, provided dismal returns there is a bright spot and its right where you live – that’s right, your home.

In the first quarter of 2022, 44.9 percent of the homes in the United States were considered “equity-rich,” meaning the balance of the loan on the home was 50 percent or less of the estimated market value, according to a new report from Attom, a real estate data analytics firm. So, if you’re looking for a breath of fresh air or bright spot to look at try checking your homes’ value.

Homeowners in the Dallas metroplex have gotten a big boost in their net worth in the past 7 years with home values through out the area up by an average of 169% according to the Zillow Home Value Index published quarterly. This is likely better than your 401K! This increase in your personal wealth is in the form of home equity. Here’s how it works.

Equity is the current value of your home minus what you owe on the loan. Home prices appreciated substantially – 169% in 7 years - because of a shortage in the number of homes available for sale versus the number of buyers looking to buy. This is a classic definition of “Demand-Pull” inflation. Although inventory of homes and increasing mortgage rates have taken some of the steam out of a very hot market in recent months home prices both nationally and in our area remain strong.

According to Norada Real Estate Investments The typical home value of homes in the DFW metro is currently $397,905. It indicates that 50 percent of all housing stock in the area is worth more than $397,905 and 50 percent is worth less (adjusting for seasonal fluctuations). In July 2021, the typical value of homes in Dallas was around $313,000. DFW home values have gone up 27.1% since last July and continue rising but at a slightly slower pace.

The latest Homeowner Equity Insights from CoreLogic, the average homeowner equity nationwide has grown by $60,000 over the last 12 months. What is your home equity today?

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What Makes This So Important?

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), helps explain why this matters so much today:

“. . . the decline in the stock market has dented overall net wealth. It has fallen by $6 trillion from the first to the second quarter. Only housing wealth has held on, with homeowners’ real estate wealth (home value minus mortgage balance) rising by $1.2 trillion.”

While equity increases your overall net worth and can help you achieve other goals like buying your next home or financing some renovations to your home you may have been putting off. When you sell your current house, the equity you built up comes back to you in the sale, and it may be just what you need to cover a large portion – if not all – of the down payment on your next home.

If you are using equity for renovations through a Home Equity Line Of Credit or HELOC we strongly suggest you check with your Realtor regarding your area so you do not overprice your home for the location – especially if you are planning on selling within the next 3 years.

Bottom Line

The stock market has been unusually volatile with market swings in the DOW of as much as 600 points either way during a trading day but the equity in your home remains stable and is incredibly strong. 

Hint: Once we see what your home value is you might want to speak with your homeowners insurance agent to see if you are underinsured? Take a lesson from people that just got hit by Hurricane Ian - reports are coming in that in some areas homeowners insurance was 50% of the home value. Might be time to get a new quote on your insurance.