Every year, households across the country make the decision to rent
for another year or take the leap into homeownership. They look at
their earnings and savings and then decide what makes the most financial
sense. That equation will most likely take into consideration monthly
housing costs, tax advantages, and other incremental expenses. Using
these measurements, recent studies show that it’s still more affordable to own than rent in most of the country. There is, however, another financial advantage to owning a home that’s often forgotten in the analysis – the wealth built through equity when you own a home. Odeta Kushi, Deputy Chief Economist for First American, discusses this point in a recent blog post. She explains: “Once you include the equity benefit of price
appreciation, owning made more financial sense than renting in 48 out of
the 50 top markets, with the only exceptions being San Francisco and
San Jose, Calif.” ATTOM Data Solutions, the curator of one of the nation’s premier property databases, just analyzed the typical home-price gain owners nationwide enjoyed when they sold their homes. Here’s a breakdown of their findings: CoreLogic, another property data curator, also weighed in on the subject. According to their latest Homeowner Equity Insights Report, the average homeowner gained $17,000 in equity in just the last year alone. Here are the seven major home price appreciation forecasts for 2021: As you make your plans for the coming year, be sure to consider the
equity benefits of home price appreciation as you weigh the financial
advantages of buying over renting. When you do, you may find this is the
perfect time to jump into homeownership.Want to Build Wealth? Buy a Home This Year.
What has this equity piece meant to homeowners in the past?
The typical gain in the sale of the home (equity) has increased significantly over the last five years.
What does the future look like for homeowners when it comes to equity?
The National Association of Realtors (NAR) just reported
that today, the median-priced home in the country sells for $309,800.
If homes appreciate by 5% this year (the average of the forecasts), the
homeowner will increase their wealth by $15,490 in 2021 through
increased equity.
Bottom Line