What do Rising Prices Mean to You as a Homeowner?

What do Rising Prices Mean to You as a Homeowner?

With home prices continuing to rise at an exponential rate throughout 2021, homeowners are realizing an unexpected financial boost to their equity positions. Real estate holdings, whether as your primary residence, a vacation home or non-owner-occupied investment property, are excellent tools to help grow your net worth and build you and your family’s wealth over time. A home’s equity is often forgotten about as you routinely make your mortgage payments every month, but the gap between what you owe and what your home is worth has dramatically increased with the rising home prices over the past few years, and it can be helpful to know exactly where you are sitting!

Your net worth is the net balance of your assets less your liabilities – what you own, minus what you owe. Your assets might be your car, cash, or valuables/collectibles on hand, and of course, real estate holdings. Liabilities are your debt obligations: car loans, student loans, credit card debt, mortgage payoffs, etc.

To figure out your net worth, add up all your assets and liabilities, and subtract your liabilities from your assets. This changes month over month with new debts accrued and/or payments being made to mortgages, loans, etc., but you may not realize just how much of an asset your home is – especially if you have been living there for several years. We would love to schedule a quick call or walk-through with you to give you a sense of the current valuation based on today’s market conditions.

As a homeowner you have stability with your real estate investment. Yes, your home value fluctuates based on market conditions (although in the greater Madison area we are seeing nothing except double-digit valuation increases compared to 1 year ago), but when you make your mortgage payment each month, you are gradually decreasing your liability. Plus, as home values are appreciating over time, your net worth grows exponentially with homeownership month over month when you combine the regular payments + appreciation.

If you are a homeowner, let us know if you’d like to find out where you are sitting with equity in your house, based on how the market has been performing and your outstanding mortgage balance. If you don’t want to sell, it is also not unusual for homeowners to take advantage of and tap into their home equity to fund other personal needs – i.e. home improvements, pay off loans, college tuition, funding an investment property, etc., or to look into refinancing while the rates remain very low!  We would love to talk through these options with you and also share the potential net worth that you’re sitting on from your home. 

Posted by Alison Crim on
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