Rising home prices have been in the news a lot recently, much of the focus is on whether they’re proceeding too quickly and how sustainable the growth in prices really is. One of the overlooked benefits of rising prices, is the impact they have on the
homeowner’s equity position.
Home equity is defined as the difference between a home’s fair market value and the balance of all liens on the property. While homeowners are paying down their mortgages, the amount of equity they have in their homes grows each time the value increases.
Today, the number of homeowners that currently have equity in their homes is growing. According to the Census Bureau , 38% of all homes in the country are mortgage-free. In a home equity study, ATTOM Data Solutions revealed that of the 54.5 million homes with a mortgage, 26.7% of them have at least 50% equity. That number has been increasing over the last 8 years.