We’ve talked a lot about home prices rising lately. We’ve mentioned the high demand levels and low inventories, and know that rents are skyrocketing, mortgage rates are low, and the economy is recovering. Everyone agrees that the housing market has been making a strong come back from the lows of the crash in 2008 - some are even worried about a bubble again (though we’ve said we expect slower, steady growth that’s more sustainable as we move forward now). So it seems natural that a lot of homeowners are more optimistic about their home’s market value. But surprisingly, most of them are underestimating how much their home price has gone up.
About 80% of homeowners currently underestimate the amount of value their home has gained since the recovery. And those who bought prior to 2009 (when the slow climb from the bottom began) are much less optimistic about the amount of equity they think they have than those who bought in 2009 or later. It seems the devastating losses many took to the value of their property have left a bit of a scar, and they may not realize just how much values have recovered.
According to recent reports, by the 4th quarter of 2015, about 46 million or 92 percent of all properties with a mortgage had equity, and about 1 million households regained equity during the year. With the current state of the market, and steady increases in values, equity levels are expected to continue to build throughout 2016. Economists project around 2.3 to 4.7 % in gains this year.
Of those 80% underestimating their equity, too many are unclear about how to determine changes to their home’s value. If you're relying on changes to your property taxes as a guide of your home’s value, you’re not getting an accurate picture. The assessed value is often not fully accurate, and may not keep up with a rapidly shifting market. The National Taxpayers Union claims an estimated 60% of properties are over-assessed. The remaining 40% could easily be undervalued.
Many people turn to online sources like Zillow for estimates on their home, and these can be a convenient tool to begin thinking about your property value. But remember, online sites, or even the price your neighbor recently listed their house for can only give you a rough starting point. The only way to get a truly accurate assessment of your home’s current value is to get a full home appraisal, or to talk with a Realtor. A Realtor has knowledge of the local market, comps in the area, and a feel for the details and intangibles of a property that contribute to its desirability beyond the numbers on paper. We know what your property is really worth, and we know what we could sell it for if it was listed.
Wondering how much equity you might have? Talk to us about your property!