“Even though home prices are climbing far above people’s income, exceptionally low mortgage rates have permitted people to buy a home without overstretching their budget. For someone making a 20% down payment, the monthly mortgage payment at today’s mortgage rates would take up 15% of a person’s gross income. During the bubble years, it was reaching 25% of income. The long-term historical average is around 20%. Therefore, a middle-income household does not need to overstretch their budget much if at all to buy a typical home.”
The study also revealed:
- 95% of homes valued over $200,000 now have a positive equity position
- 87% of homes valued under $200,000 have entered a positive position
- The 11.5% growth in home equity in Q4 marked the 13th consecutive quarter of double digit gains
Significant Equity Is On The RiseAnand Nallathambi, President & CEO of CoreLogic, believes this is great news for the “long-term health of the U.S. economy.” He went on to say:
“The number of homeowners with more than 20% equity is rising rapidly. Higher prices driven largely by tight supply are certainly a big reason for the rise, but continued population growth, household formation and ultralow interest rates are also factors.”Of the 91.5% of homeowners with positive equity in the US, 72.6% have significant equity (defined as more than 20%). This means that nearly three out of four homeowners with a mortgage could use the equity in their current home to purchase a new home now. The map below shows the percentage of homes with a mortgage, in each state, with significant equity.
Bottom LineIf you are one of the many homeowners who is unsure of how much equity you have in your home and are curious about your ability to move, let's meet up to evaluate your situation.
SUPPLYThe National Association of Realtors (NAR) recently reported that the inventory of homes for sale stands at a 4.4-month supply. This is considerably lower than the 6-month inventory necessary for a normal market. DEMAND Every month NAR reports on the amount of buyers that are actually out in the market looking for homes, or foot traffic. As seen in the graph below, buyer demand in February significantly outpaced the last six months. Many buyers are being confronted with a very competitive market in which they must compete with other buyers for their dream home (if they even are able to find a home they wish to purchase). Listing your house for sale now will allow you to capitalize on the shortage of homes for sale in the market, which will translate into a better pricing situation.
HOME EQUITYMany homeowners underestimate the amount of equity they currently have in their home. According to a recent Fannie Mae study, 37% of homeowners believe that they have more than 20% equity in their home. In reality, CoreLogic’s latest Equity Report tells us that 72.6% actually do! Many homeowners who are undervaluing their home equity may feel trapped in their current home, which may be contributing to the lack of inventory in the market.
Bottom LineIf you are debating selling your home this year, let's meet up to evaluate the equity you have in your home, as well as the opportunities available in your market.
Bottom LineIf you are thinking of selling your home, let's meet up to discuss the process!
Boston Area Luxury Home Market Report Jan 25 2016. I am a Million Dollar Guild member of the Certified Luxury Home Marketing Specialists group. The top 1% of agents in the country. The International Luxury Home Marketing specialists organization provides me with a weekly report that covers the world luxury market and drills down into the specific luxury areas of the world. I live in the Boston area and that is where I work. Here is this week’s report. As we leave the holiday season, we are looking down the barrel of the new spring season. While prices of luxury homes has always remained reasonably stable it appears we are in for an
earlier uptick in prices. The super high end luxury condos on the waterfront in Boston are reselling right now at a $500,000 profit as reported in today’s print edition of the Boston Globe.
Another plus side for the Sellers is that the inventory remains low. Low inventory sparks more competition for your property. Let’s be careful here in stating that not all luxury properties are the same and not all areas in Boston are receiving the exact same rise in prices and reduction of inventory. You can expect the market will perform normally and more inventory will be coming on the market soon.
Days on Market with luxury is always a bit longer than the normal markets since there are fewer people capable of buying a luxury property. Luxury is defined as the top 10% of the MLS in that area. The luxury market in a town like Newton begins above $2,000,000. The more prices rise and inventory rises with it the Days on Market will rise. With more homes for sale it takes longer for the Buyer to review all the potential homes and communities to make the right choice for their families. You can see the uptick in days here.
Reducing your price is one of the three factors in getting a home sold. The List price reflects the market and the Seller’s wishes in large part. This is not what the Buyer wants. The agent and the Seller have no and little control of what the Buyer will pay. Great marketing will bring people in if the price is right. The condition of the home will confirm the price, but it is the Buyer who sets the price. Most Sellers assume the Agent can control this and they can not beyond great marketing that draws lots of eyeballs to the listings and traffic to the house. Getting the price right is important, but reacting to the market in the appropriate way when you are not generating the traffic you want is the way to get your house sold. The longer it is on the market the more stale it seems and no one wins in that scenario other than the Buyer. This has been the Boston Area Luxury Home Market Report Jan 25 2016