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The Benefits of Growing Equity in Your Home

by Christie Cannon

The Benefits of Growing Equity in Your Home

The Benefits of Growing Equity in Your Home | MyKCM
 

Over the last couple of years, we’ve heard quite a bit about rising home prices. Today, expert projections still forecast continued growth, just at a slower pace. One of the often-overlooked benefits of rising home prices is the positive impact they have on home equity. Let’s break down three ways this is a win for homeowners.

1. Move-Up Opportunity

With the rise in prices, homeowners naturally experience an increase in home equity. According to the Homeowner Equity Insights from CoreLogic,

“In the first quarter of 2019, the average homeowner gained approximately $6,400 in equity during the past year.”

This increase in profit means if homeowners decide to sell, they’ll be able to put their equity to work for them as they make plans to move up into their next home.

2. Gain in Seller’s Profit

ATTOM Data Solutions recently released their Q2 2019 Home Sales Report, indicating the seller’s profit jumped at one of the fastest rates since 2015. They said:

“A look at the national numbers showed that U.S. homeowners who sold in the second quarter of 2019 realized an average home price gain since the original purchase of $67,500...the average home seller gain of $67,500 in Q2 2019 represented an average 33.9 percent return as a percentage of the original purchase price.”

Looking at the amount paid when they bought their homes, and then the amount they received after selling, we can see that some homeowners were able to walk away with a significant gain.

3. Out of a Negative Equity Situation

Negative equity occurs when there is a decline in home value, an increase in mortgage debt, or both. Many families experienced these challenges over the last decade. According to the same report from CoreLogic,

“U.S. homeowners with mortgages (roughly 63% of all properties) have seen their equity increase by a total of nearly $485.7 billion since the first quarter 2018, an increase of 5.6%, year over year.

In the first quarter of 2019, the total number of mortgaged residential properties with negative equity decreased…to 2.2 million homes, or 4.1% of all mortgaged properties.”

The good news is, many families have moved beyond a negative equity situation, and no longer owe more on their mortgage than the value of their home.

Bottom Line

If you’re a current homeowner, you may have more equity than you realize. Your equity can open the door to future opportunities, such as moving up to your dream home. Let’s get together to discuss your options and start to put your equity to work for you.

 
Dallas-Fort Worth is again near the top of a shopping list for commercial property investors — behind only Los Angeles in a new survey. For the third year in a row, commercial real estate firm CBRE ranked D-FW second nationally in its survey of property investors. Houston also made the top 10.

Investors said industrial and warehouse buildings and apartments were their most targeted properties for 2019.
 

 

"We are seeing unprecedented investor interest for industrial and logistics properties in Dallas-Fort Worth coming not only from U.S. investors but also global capital from Asia, primarily Singapore, Europe, and the Middle East," Randy Baird, CBRE executive vice president of Industrial & Logistics, said in the report. "D-FW is capturing the interest of all forms of capital because we are at a central point in the U.S. supply chain, we have a pro-business environment with a low cost of doing business, and we have nation-leading population growth. 
"Investors are attracted not only by the current market fundamentals, which are stronger than ever but by the long-term view that D-FW and Texas as a whole will continue to outpace the country in population and job growth, translating to long-term asset appreciation.  "Only 1 in 10 of the investors CBRE polled said they planned to acquire office buildings this year. And only 9 percent said they were shopping for retail properties.  While 98 percent of the real estate industry execs CBRE surveyed said they planned to make property acquisitions this year, more investors indicated they would be more cautious in their buys."Pricing is at or near the previous peak for most asset types in prime locations, so investors are seeking yield in secondary markets and alternative asset types," said Chris Ludeman, Global President of Capital Markets for CBRE.  CBRE surveyed investors in November and December for the annual report. 
 After Los Angeles and D-FW, the real estate markets that investors are most hot on are Washington, D.C., San Francisco, Seattle, Denver and Atlanta.  When asked to list their top concerns for the real estate market this year, investors most often mentioned a global economic shock, rising interest rates and a property price bubble.  CBRE's annual investor poll is just the latest industry snapshot in which D-FW won high marks. Last fall, the Urban Land Institute and PriceWaterhouse Coopers identified D-FW as the top market for 2019 real estate investment and development activity.
 

Dallas-Fort Worth has lowest risk for home-price declines

by Christie Cannon

By STEVE BROWN / The Dallas Morning News

The latest home price risk forecast shows that Dallas-Fort Worth is overall the safest place in the country for stable home values.

The latest report by mortgage insurance company PMI Group ranked the D-FW area dead last among the 50 cities it rates for possible declines in home prices.

That means PMI is betting there is less than a 1 percent chance that average home prices here will be lower two years from now.

PMI's summer 2008 risk ranking for D-FW is similar to the insurance company's previous studies.

As in other PMI reports, the U.S. cities with the biggest run-up in home prices in recent years are at the greatest risk for losses.

During the last year, some markets have seen a significant increase in the number of existing single-family homes for sale, PMI chief economist David Berson said in the report.

"Given the magnitude of the inventory overhang, we expect national home price declines to continue into at least 2009," Mr. Berson said.

In North Texas, however, the number of pre-owned homes listed for sale has declined during the last year.

Although PMI Group's report about D-FW home prices should be encouraging, Mr. Berson said that doesn't mean there won't be short-term declines in values.

"It is also an average for a metropolitan area, so individual neighborhoods and houses could behave differently," he said, perhaps considerably so.

Likelihood of lower home prices in each market in two years.
GREATEST RISK
Riverside-San Bernardino-Ontario, Calif. 95.5%
Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. 92.2%
West Palm Beach-Boca Raton-Boynton Beach, Fla. 91.9%
Orlando-Kissimmee, Fla. 91.1%
Las Vegas-Paradise, Nev. 88.1%
LOWEST RISK
Fort Worth <1%
Dallas <1%
Pittsburgh <1%
Houston <1%
San Antonio <1%
SOURCE: PMI Group.

Report: Dallas-Fort Worth home prices least likely to drop

by Christie Cannon

 

Report: Dallas-Fort Worth home prices least likely to drop

07:30 AM CST on Wednesday, January 16, 2008

By STEVE BROWN / The Dallas Morning News

Dallas-Fort Worth's housing market is the least likely of any in the country to see a decrease in home values, a new report confirms.

At the same time, the chances of a house price decline rose in almost four out of five U.S. markets, according to a report released Tuesday by mortgage insurance firm PMI Group.

Dallas and Fort Worth ranked dead last in PMI Group's latest forecast of cities with the biggest chance for a home price shakeout.

Analysts with the California-based company estimate that Dallas-Fort Worth has less than a 1 percent chance of marked home price drops in the next two years.

By comparison, cities in California, Nevada and Arizona have more than an 80 percent likelihood of falling residential values.

"We're seeing an increasingly polarized market," PMI economist David Berson said in a news release.

"The risk that home prices will be lower in two years has increased for many of the largest cities in the nation, although areas that saw only moderate home price gains during the 2002-to-2005 period still generally have low risks of price declines," he said.

That's certainly the case in Dallas-Fort Worth, where home price appreciation during the last five years has been a fraction of the national average.

"Because Texas did not participate in the double-digit home price gains in the first half of the decade, it doesn't have to take the great pain of the areas that are compensating for that now," Mr. Berson said in an interview.

Now that the housing sector is in a slump, home values in North Texas have been relatively flat while they are falling in many other major U.S. cities.

In 2007, the median price of homes sold through the North Texas Realtors' multiple listing service was up 1 percent from 2006.

Texas markets – including the D-FW area – were also less affected by investors who ran up prices in some cities, Mr. Berson said.

And most Texas cities are outpacing the rest of the country in overall economics, he said.

"The state economy is doing pretty well, and job growth is above the national average," Mr. Berson said.

"It's quite likely Texas will be doing better than the national average for the foreseeable future," he said.

The D-FW area has gotten high marks in the PMI risk report before.

And other national surveys show that North Texas' housing market is outperforming those in the rest of the country.

Even so, pre-owned home sales were down about 8 percent last year, and sales of new homes fell about 17 percent in 2007.

Foreclosure rates also continue to rise.

Analysts are therefore keeping a close eye on D-FW home prices for signs of deterioration.

"I can't argue with the PMI risk assessment, but it doesn't mean that it still couldn't happen – just not as likely as elsewhere," said Dr. James Gaines, an economist with Texas A&M University's Real Estate Center. "So far, most Texas markets are doing well.

"The metroplex probably will do well to have positive overall appreciation, but pockets within the metroplex will have a rough time for a while."

Indeed, Mr. Berson said, the Texas housing market isn't bulletproof.

"There are no sure things," he said.

"It's possible that some parts of Texas will see some declines in the near term."

But overall, the outlook for the local housing market is good, he said.

 

HOW RISKY IS THE HOUSING MARKET?

 

Markets with the most and least risk of a home price decline, based on price appreciation, economic growth and affordability according to PMI Group, one of the country's largest mortgage insurance firms. An index of 100 means there is a 100 percent chance of home prices falling in the next two years.

 

MOST RISKY

 

Riverside, Calif. 94

Las Vegas 89

Phoenix 83

Santa Ana, Calif. 81

Los Angeles 79

 

LEAST RISKY

 

Fort Worth Less than 1

Dallas Less than 1

Pittsburgh Less than 1

Houston Less than 1

San Antonio Less than 1

SOURCE: PMI Group

 

Dallas home prices rise among few U.S. gains

by Christie Cannon
Dallas home prices rise among few U.S. gains
Industry experts say foreclosures a concern
11:15 AM CDT on Thursday, August 30, 2007
By STEVE BROWN / The Dallas Morning News
stevebrown@dallasnews.com
Dallas is one of the few cities in the nation where home prices are still rising slightly, according to a national housing survey released Tuesday.
While U.S. home prices fell 3.2 percent in the second quarter, Standard & Poor's quarterly housing index reports that the Dallas metropolitan area was one of only five markets in the country with price gains.
Of the 20 cities it surveys, only Dallas , Seattle , Portland , Ore. , Atlanta and Charlotte , N.C. , had annual gains in home prices in the second quarter.
But it's hard to say whether the 1.6 percent gain in Dallas home prices is sustainable, industry experts say.
Dr. James Gaines of Texas A&M University 's Real Estate Center said "In a lot of places in Dallas , home prices are still going up by double digits.” In other neighborhoods, they are actually falling. But across the board, the gainers outweigh the losers," he said.
As mortgage lenders tighten loan requirements, a significant number of potential homebuyers have been locked out of the market. That could hurt the volume of sales in North Texas in the months ahead.
"It may take awhile to sort out" what's happening in the mortgage market, Dr. William Brueggeman, director of SMU's real estate department said. "There is going to be a little pain and suffering here, but nothing like we are seeing in other markets."
Fewer subprime woes
Dr. Gaines says that even with the soaring foreclosure rates, there have been fewer subprime mortgage problems here.
"The mortgage shakeout is affecting other parts of the country a lot more than it is Texas ," he said. "We didn't have anywhere near the level or magnitude" of subprime loans that other markets did.
But that doesn't mean that Dallas-Fort Worth homeowners aren't going to be hammered with a steady diet of bad news about the U.S. housing market. Those negative reports weigh on consumer psychology.

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Photo of Christie Cannon Real Estate
Christie Cannon
Keller Williams Realty
4783 Preston Road #300
Frisco TX 75034
972-215-7747
Fax: 214-853-4774
Keller Williams Frisco - The Christie Cannon Team - http://www.christiecannon.com

 

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