Strong Equity Gains are Giving Homeowners More Options


Residential homes in the United States have experienced strong equity gains in the last three years, and a recent survey indicates that they expect the equity gains to continue in 2016.  In a new survey conducted by loanDepot released Monday, 60 percent of respondents said their homes have gained equity in since 2013 as the housing market in the United States has stabilized. Despite these gains over the last three years, almost half (46 percent) of respondents said they expect their homes to continue gaining equity this year.

Timing makes all the difference to homeowners when estimating equity; whether or not a homeowner bought during the boom (2000 to 2006) or during or after the bust (2007 to 2009) seemed to be the main contributing factor in attitude toward home equity. The loanDepot research revealed that 64 percent homeowners who bought homes post-2009 believe their homes have gained equity since 2013, compared with 58 percent of those who bought prior to 2009. Additionally, 50 percent of those who bought post-bust expect their homes to gain equity in 2016 compared to 43 percent of pre-2009 buyers. A larger percentage of post-2009 buyers (65 percent) said they believe they have enough equity for a home equity loan now, compared to 52 percent of those who bought prior to 2009. According to loanDepot, post-2009 buyers are more bullish in their attitudes toward equity because they did not experience the same drastic losses that pre-housing bubble buyers did.

Nearly three in five (59 percent) of homeowners surveyed overall said they believe they had built up enough equity to take out a home equity loan, according to loanDepot.  “Homeowners who bought during the housing boom are regaining equity many thought was lost forever, yet too many are not aware of the equity they have gained or they are unclear about how to determine changes in their equity,” said Bryan Sullivan, chief financial officer of loanDepot, LLC. “People who bought after the housing boom when prices were low are realizing homeownership can be a great investment and an asset that they can now leverage through equity to realize many dreams. Whether they choose to leverage their home equity now or reserve it for future needs, millions of homeowners have choices today not available just a few years ago.

Of those who expect their homes to gain equity in 2016, loanDepot reported that 85 percent expect that the equity in their homes will increase by as much as 10 percent. Slightly more than a quarter (27 percent) said they expect equity to increase by 6 to 10 percent. According to loanDepot, only 3 percent surveyed said they expect the equity in their homes to decline this year, while 27 percent said they expect it to remain the same.

Of the homeowners surveyed who believe their homes have regained equity in the last three years, the loanDepot research indicates that 80 percent are underestimating the amount of equity they have gained. According to the survey, 27 percent of respondents estimate their equity increased by 1 to 5 percent over the last three years while the Case-Shiller 20-city index reported that home prices increased by double that amount over the same period (10 percent from the two-year stretch between November 2013 and November 2015).

The interviews for the survey were conducted between January 15 and 17, 2016. According to loanDepot, 1,000 homeowners (500 males and 500 females) were interviewed.

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