March 8, 2017 | Mac Rogers
The Connection Between Home Prices & Family Wealth | Simplifying The Market

One of the things that I always tell my clients buying in the east bay (Castro Valley, Hayward, San Leandro, San lorenzo etc) is to first and foremost treat their home as a home and NOT as an investment. Now this my sound shocking to a majority of people but in doing this you ensure that you are not always looking over your shoulder and wondering whether the value has gone up or done.

Case in point. The last real estate down turn, saw a lot of homeowners lose their home to foreclosures and short sales. Some people chose to sell their home on a short sale even though they could still afford the home. They bought into the notion that the investment that they had was losing money and had to be cut. My argument was that once you sold your home that was under water, you would be paying rent anyways and actually be throwing money away.

Now that we are out of that nasty down turn, most if not all of those properties that were under water are now back "in the money". The homeowners that sold short or let it go to foreclosure? Most of them can't afford a home at these prices now.

Over the next five years, home prices are expected to appreciate 3.22% per year on average and to grow by 17.3% cumulatively, according to Pulsenomics’ most recent Home Price Expectation Survey .
So, what does this mean for homeowners and their equity position?
As an example, let’s assume a young couple purchased and closed on a $250,000 home in January. If we look at only the projected increase in the price of that home, how much equity will they earn over the next 5 years?
The Connection Between Home Prices & Family Wealth | Simplifying The Market
Since the experts predict that home prices will increase by 4.4% this year alone, the young homeowners will have gained $11,000 in equity in just one year.
Over a five-year period, their equity will increase by nearly $43,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth.

Bottom Line

Not only is homeownership something to be proud of, but it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, find out if you are able to today!


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