Richmond, Virginia Real Estate BlogRecently posted or modified blog posts in the category - Owning A Homehttps://www.elliottreteam.com/blog/Copyright ElliottReTeam.com2023-11-01T02:28:31-07:00tag:elliottreteam.com,2012-09-20:18116Am I Losing My Home Equity?Are you worried about losing the equity you've built in your home? As a real estate agent leading a team in Richmond, Virginia, I've received this question from numerous homeowners. In this blog post, we'll delve into the data and insights to address this common concern.
Examining the Numbers
First and foremost, let's take a close look at the numbers. In the Central Virginia market for resale homes, we've witnessed a robust 7.2% increase in home values year-over-year, comparing September 2022 to September 2023. This data is particularly relevant since we're analyzing it in October 2023. To provide some context, in September 2022, our market saw a 7.8% increase in home values compared to September 2021. So, based on this data, it's safe to say that homeowners in our region are not losing their equity. In fact, their home values have been steadily appreciating.
Understanding the Impact of Interest Rates
You might be wondering how this continued appreciation is possible, given the impact of higher interest rates on the real estate market. It's a valid concern. Yes, higher interest rates have affected buyer demand and have led to a decrease in the number of buyers looking to purchase homes. However, these higher interest rates have also affected seller supply. Many homeowners locked in very favorable, long-term financing with mortgage rates at or below 3%. This has made them hesitant to sell their current homes and transition into new ones with significantly higher interest rates. As a result, the supply of homes available for sale has dwindled.
The intriguing aspect is that even though buyer demand has decreased, the limited supply of homes has prevented a decline in home prices. In fact, prices have continued to hold steady and appreciate in our market.
Feeder Markets and Their Influence
A key factor in maintaining home values is the origin of our buyers. Our two largest feeder markets, Northern Virginia and the tri-state area (New York, New Jersey, Connecticut), have residents moving to Central Virginia. They come from more expensive markets and realize that our region offers more affordable housing. When they arrive here, they continue to drive up prices because they have the financial means to do so, and their expectations regarding home prices are different from what the local market previously offered.
Future Predictions
Now, let's consider what the future holds. The Home Price Expectation Survey, conducted with input from 100 accredited real estate economists, indicates that we can expect continued home price appreciation through 2027. This appreciation is expected to be at more normalized rates, more in line with the 50-year historical average. In essence, the housing market is predicted to remain strong and stable.
Gains Over the Last 5 Years
Lastly, it's important to recognize the significant gains homeowners have made over the past five years. Nationally, the average home equity or appreciation gained during this period was 57.3%. In Virginia, it was slightly lower but still impressive at 52.4%. Even if there were a slight dip in the future, the fact remains that homeowners have accumulated substantial equity over the years.
In conclusion, the data and expert opinions suggest that homeowners in Central Virginia need not worry about losing the equity they've built in their homes. The market is strong, and the future looks promising. If you have any questions, concerns, or would like to explore the real estate market in more detail, feel free to reach out to me. I'm here to assist you.
Thank you for reading, and I look forward to providing more insights in the future. If you have any comments, questions, or even a good joke, please don't hesitate to share them with us. Your feedback is always valued.2023-11-01T02:26:44-07:002023-11-01T02:28:31-07:00Chris Elliotttag:elliottreteam.com,2012-09-20:12201A Key To Building Wealth Is HomeownershipA Key To Building Wealth Is Homeownership
<img width="750" height="410" src="https://files.mykcm.com/2022/03/24150309/20220328-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="A Key To Building Wealth Is Homeownership | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2022/03/24150309/20220328-KCM-Share.jpg 750w, https://files.mykcm.com/2022/03/24150309/20220328-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2022/03/24150309/20220328-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" /><br /><br />
The link between financial security and homeownership is especially important today as <a href="https://www.simplifyingthemarket.com/2022/01/11/why-inflation-shouldnt-stop-you-from-buying-a-home-in-2022/?a=439874-5c8d14f6c531cb5eadf7b99e8a945152" title="inflation">inflation</a> rises. But many people may not realize just how much owning a home contributes to your overall <a href="https://www.simplifyingthemarket.com/2022/02/21/real-estate-voted-the-best-investment-eight-years-in-a-row/?a=439874-5c8d14f6c531cb5eadf7b99e8a945152" title="net worth">net worth</a>. As Leslie Rouda Smith, President of the National Association of Realtors (NAR), <a href="https://www.nar.realtor/newsroom/middle-income-households-gain-2-1-trillion-in-housing-wealth-in-a-decade" title="says" target="_blank" rel="noopener noreferrer">says</a>:
"Homeownership is rewarding in so many ways and can serve as a vital component in achieving financial stability."
Here are just a few reasons why, if you’re looking to increase your financial stability, homeownership is a worthwhile goal.
Owning a Home Is a Building Block for Financial Success
A recent NAR <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-snapshot-of-race-and-home-buying-in-the-us-report-02-23-2022_0.pdf" title="report" target="_blank" rel="noopener noreferrer">report</a> details several homeownership trends and statistics, including the difference in net worth between homeowners and <a href="https://www.simplifyingthemarket.com/2022/02/25/the-difference-between-renting-and-owning-infographic/?a=439874-5c8d14f6c531cb5eadf7b99e8a945152" title="renters">renters</a>. It finds:
“. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.”
To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter (see visual below):
<a href="https://files.mykcm.com/2022/03/24150344/20220328-MEM-Eng.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-101625" src="https://files.mykcm.com/2022/03/24150344/20220328-MEM-Eng.png" alt="A Key To Building Wealth Is Homeownership | MyKCM" width="600" height="450" /></a>
The results from this report show that owning a home is a key piece to the puzzle when building your overall net worth.
Equity Gains Can Substantially Boost a Homeowner’s Net Worth
The net worth gap between owners and renters exists in large part because homeowners build <a href="https://www.simplifyingthemarket.com/2022/03/21/the-average-homeowner-gained-more-than-55k-in-equity-over-the-past-year/?a=439874-5c8d14f6c531cb5eadf7b99e8a945152" title="equity">equity</a>. As a homeowner, your equity grows as your home <a href="https://www.simplifyingthemarket.com/2022/03/03/are-home-prices-continuing-to-rise/?a=439874-5c8d14f6c531cb5eadf7b99e8a945152" title="appreciates">appreciates</a> in value and you make your mortgage payments each month.
In other words, when you own your home, you have the benefit of your mortgage payment acting as a contribution to a forced savings account. And when you sell, any equity you’ve built up comes back to you. As a <a href="https://www.simplifyingthemarket.com/2022/01/31/owning-is-more-affordable-than-renting-in-the-majority-of-the-country/?a=439874-5c8d14f6c531cb5eadf7b99e8a945152" title="renter">renter</a>, you’ll never see a return on the money you pay out in rent every month.
To sum it up, NAR says it <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-snapshot-of-race-and-home-buying-in-the-us-report-02-23-2022_0.pdf" title="simply" target="_blank" rel="noopener noreferrer">simply</a>:
“Homeownership has always been an important way to build wealth.”
Bottom Line
The gap between a homeowner’s net worth and a renter’s shows how truly foundational homeownership is to wealth-building. If you’re ready to start on your journey to homeownership, let’s connect today.
2022-03-28T07:30:00-07:002022-03-31T07:39:19-07:00Chris Elliott