How Your Equity Could Help Younger Generations Buy a Home
For a lot of parents or grandparents, watching a family member struggle to buy their first home right now is hard.
Four Ways Your Home Equity Can Work for You
You may have heard homeowners today have a lot of equity built up. But what does that really mean? Let’s break it down.
Because your equity isn’t just a number, it’s a powerful asset that can help you take your next big step in life.
How Much Equity Does the Typical Homeowner Have?
Here’s how it works. As you pay down your loan and home prices rise through the years, the share of your home that you own free and clear grows. That’s your equity.
And according to data from the Census and ATTOM, two-thirds of homeowners have a substantial amount of it today.
39% own their home outright without owing anything on it. And another 27% have at least 50% equity in their homes (see chart below):
That’s a big deal. And just in case you’re wondering how that translates into real dollars, Cotality says the typical homeowner has almost $300k in equity today. That’s six figures.
And whether you have that much, even more, or a bit less, here are a few examples of how you can use it.
Ways You Could Use Your Home Equity
1. Move Into a Home That Better Fits Your Life
Your needs change over time. Maybe your home is starting to feel cramped, or maybe you have more space than you need now that your adult children have moved out. Either way, you can use your equity as a down payment on a home that’s a better fit for what you need now, and going forward. You may even have enough equity to buy your next house in cash.
2. Upgrade Your Current Home
And if you’re not ready to move just yet, you could reinvest it in your current home instead. Renovations like a kitchen refresh or updated bathrooms could add value when it’s time to sell down the line. Just be sure to talk to a real estate agent before you tackle your project list, so you can prioritize updates that’ll give you the biggest return later on.
3. Fund a Major Life Goal
Equity can also help fund your life goals – whether it’s starting a business, saving for retirement, covering education costs, or helping out someone you love. Some homeowners are even passing down some of that wealth to help fund a loved one’s down payment on a home.
4. Avoid Foreclosure in Tough Times
If you’re struggling with payments, your equity can also be a lifeline. Many homeowners who hit financial hardships can sell their homes and walk away with money in their pockets instead of facing foreclosure. If that’s something on your mind, talk to a real estate expert about your options and how your equity can help.
Your Next Steps
If you’re interested in using your equity for one of the reasons above, here’s what to do:
- Step 1: Ask a local agent for a personalized equity assessment on your home.
- Step 2: Meet with a financial advisor if you’re interested in using that equity.
Because when it comes to tapping into this resource, there are a few things you’ll want to keep in mind – like making sure you still have a good loan-to-value ratio (LTV) even if you use some of your equity.
That means, as a general rule of thumb, you want to maintain at least 20% equity in your home as a financial cushion – something many homeowners didn’t know back in the crash of 2008.
The good news is, according to the Intercontinental Exchange, most of today’s equity meets that guideline:
“As of Q4, mortgage holders have $17.3T in home equity, including $11.2T in tappable equity ‒ accessible via cash-out refinances or home equity lines while maintaining 20% equity in the property . . . ”
Bottom Line
Your home equity is one of the biggest financial assets you have. Whether you’re thinking about moving, remodeling, or working toward a big goal, it’s worth exploring your options. Reach out to a financial advisor to learn more.
What’s one goal you have that you’d go after right now, if you had the funds for it?
Why So Many Homeowners Are Downsizing Right Now
For a growing number of homeowners, retirement isn’t some distant idea anymore. It’s starting to feel very real.
According to Realtor.com and the Census, nearly 12,000 people will turn 65 every day for the next two years. And the latest data shows as many as 15% of those older Americans are planning to retire in 2026. And another 23% will do the same in 2027.
If you’re considering retiring soon too, here’s what you should be thinking about.
Why Downsize?
Now’s the perfect time to reflect on what you want your life to look like in retirement. Because even though your finances will be going through a big change, you don’t necessarily want to feel like you’re living with less.
But odds are, what you do want is for life to feel easier.
Easier to enjoy.
Easier to manage.
Easier to maintain day-to-day.
The Top Reasons People Over 60 Move
You can see these benefits show up in the data when you look at why people over 60 are moving. The National Association of Realtors (NAR) finds the top 4 reasons aren’t about timing the market or chasing top dollar. They’re about lifestyle:
- Being closer to children, grandchildren, or long-time friends so it’s easier to spend more time with the people who matter most
- Wanting a smaller, more functional home with fewer stairs and easier upkeep
- Retiring and no longer needing to live near the office, so it’s easier to move wherever you want
- Opting for something smaller to reduce monthly expenses tied to utilities, insurance, and maintenance
No matter the reason, the theme is the same: downsizing isn’t about giving something up. It’s about gaining control and choosing simplicity. And it brings peace of mind to know your home fits the years ahead, not the years behind.
And the best part? It’s more financially feasible now than many homeowners would expect.
The #1 Thing Helping So Many Homeowners Downsize
Here’s the part that makes it possible. Thanks to how much home values have grown over the years, many longtime homeowners are realizing they’re in a stronger position than they thought to make that move.
According to Cotality, the average homeowner today has about $299,000 in home equity. And for older Americans, that number is often even higher – simply because they’ve lived in their homes longer.
When you stay in one place for years (or even decades), two things happen at the same time:
- Your home value has time to grow.
- Your mortgage balance shrinks or disappears altogether.
That combination creates more options than you’d expect, even in today’s market.
So, whether you just retired, or you’re about to, it’s not too soon to start thinking about what comes next. Sure, it can be hard to leave the house you made so many years of memories in, but maybe it’s time to close one chapter to open a new one that’s just as exciting.
Bottom Line
Downsizing is about setting yourself up for what comes next – on your terms.
If retirement is on the horizon and you’ve started wondering what your current house (and your equity) could make possible, the first step isn’t selling. It’s understanding your options.
It’s time to talk to an agent. A simple, no-pressure conversation can help you see what downsizing might look like – and whether it makes sense for you.
Headlines Have You Worried about Your Home’s Value? Read This.
Hearing talk about home prices falling? That may leave you worried about whether your house is losing value. But here’s what you need to know. While some local markets have seen small price dips this year, home prices are not falling nationally. So, don’t let the headlines scare you.
The vast majority of the country is actually seeing prices rise.
While that may feel surprising after the headlines you’ve seen, the map below uses year-over-year data from the Federal Housing Finance Agency (FHFA) to make that clear:
Let’s break down what this really shows.
Most states are seeing prices rise (the blue in that map). Not fall. Now, the gains aren’t as big as they’ve been in recent years, but that’s okay. The story is still, prices are growing. And that positive majority is exactly why data from the National Association of Realtors (NAR) shows, nationally, home prices are up 2.1% compared to last year.
But the headlines don’t draw attention to this. They feed on the negative. But even that isn’t as bad as it sounds.
Yes, there are some states where homes have lost value over the past 12 months (the orange in the map above). That’s what all the chatter is drawing attention too. But here’s what the data really says.
The dips aren’t happening everywhere. And in the select states where prices are inching down, it’s slight. The range here is -0.1 to roughly -2%.
And those states are the ones where prices spiked too high, too fast during the pandemic housing boom. There was always going to be a come down period after that. Now, we’re in it. In those places, prices are leveling off. And that’s a sign of normalization, not collapse.
In plain terms: Home prices aren’t crashing. And this isn’t doom and gloom or the sign of broader trouble.
Most Homeowners Still Have Plenty of Value
Just to drive that point home, here’s one more thing to reassure you. Even in the few places where prices dipped slightly, most homeowners are still way ahead. Additional context from Zillow helps prove that point:
- Only about 4% of homes are worth less than what the owner originally paid.
- And 96% of homes are still worth more than their homeowners paid for them.
But don’t just take their word for it, see for yourself. When you zoom out and look at how much home prices have grown over the past five years, it’s a lot easier to understand why so many homeowners are still in such great shape.
Nationally, prices are up almost 49% in the last 5 years alone, and just about everywhere saw double-digit price growth in that time frame. That’s why there’s no orange in this map (see below):
The truth is, across the board, homeowners are still sitting on substantial gains. So, the -0.1 to -2% declines some states are seeing now? That’s easily absorbed.
So, don’t let the headlines scare you. What’s happening with home prices this year varies a lot from one area to the next. But the takeaway is clear: a small dip in some areas doesn’t mean your home’s value is collapsing.
It means select local markets are correcting – and most of the time these are the ones that saw prices rise the most during the pandemic. You’re probably still in great shape.
Bottom Line
If you’re hearing talk about price drops or crashes, a closer look at the data can help put things in perspective. That’s only happening in some markets. Most of the nation is still seeing prices rise.
And for the vast majority of homeowners, the long-term gains far outweigh any recent softening.
If you want help understanding what’s happening in your local market, connect with a local real estate agent.
Your Equity Could Change Everything About Your Next Move
A lot of people are asking the same thing right now: “Is it even a good time to sell?” And the truth may come as a bit of a surprise…
For many homeowners, the answer is a strong yes.
Why? Because of one major factor working in your favor: your equity. Odds are, if you’ve lived in your home for a while, you know you have significant equity. But how much are we really talking about? The number might just change everything about your next move.
The Hidden Wealth of Homeownership
Here’s how it works. When you own a home, you build up something called equity.
Each time you make a mortgage payment, you’re chipping away at your loan balance. And that helps your ownership stake in your home grow. At the same time, home values typically rise – which drives up the overall value of your home.
When you put those two things together, you’re building wealth automatically, month after month, year after year.
And that combo can add up to real dollars that can make a real difference in your move. That’s especially true if you’ve lived in your house for a while, which many homeowners have. According to Realtor.com:
“Nearly half (45.2%) of today’s homeowners have lived in their home for more than 15 years, and 1 in 4 for over 25 years.”
If that’s you, just imagine what 15-25 years of payments + steady appreciation have done to your bottom line. It’s time you see how your equity stacks up over time.
What That Really Means in Dollars
This chart uses research coming out of Realtor.com to show an estimate of how much equity homeowners have built up depending on when they bought. For each time frame, it takes the median-priced home and uses it as the baseline example. The numbers are shocking, too. According to the study, if you bought the average-priced home in…
- The mid-90s? You could be sitting on over $400,000 in equity now.
- The early 2000s? You could have over $330,000, even with owning during the housing crash.
- In 2015? Even in that shorter 10-year time frame, many homeowners have already built nearly $285,000 in equity.
Of course, your actual number is going to vary based on the purchase price, any work you’ve done to the house, the size of your original down payment, and more. The point is…
A lot of homeowners are sitting on hundreds of thousands of dollars in equity without even realizing it.
Your Equity Could Power Your Next Move
Here’s where this becomes really important. That equity can offset nearly every concern you have about moving right now.
- Worried about taking on a higher mortgage rate? Your equity could cover a significant down payment. And the more money you put down, the less you need to finance at today’s rates.
- Unsure if you can compete in today’s market? Thanks to your equity, you may be able to buy your next house in cash. And an all-cash offer is something that’s going to appeal to a lot of sellers because they don’t have to worry about their buyer’s financing falling through at the last second.
Bottom Line
If you haven’t had someone help you understand the value of your home this year, now’s the perfect time to take another look. It doesn’t mean you have to sell. But it does mean you’ll at least know what you could be working with – and how far that number can take you.
If you want a custom professional equity assessment, talk to a local agent.
Why Your Home Equity Still Puts You Way Ahead
If you’ve seen headlines about home prices dropping, it’s easy to wonder what that means for the value of your home too. Here’s what you really need to know.
Even with small price declines in some markets, data shows you’re likely still way ahead. And that’s thanks to your home equity.
The Relationship Between Home Prices and Equity
Home equity moves in sync with home prices. When prices rise, equity builds. When prices cool (even just slightly), equity growth does too. Here’s how that’s played out lately.
After the record-setting home price surge of 2020 and 2021, a little cooling was inevitable.
Back then, the number of homes for sale hit a record low. That caused home values (and your equity) to shoot up significantly as buyers fought over limited inventory.
But prices couldn’t continue to rise at that intense pace forever. The market had to moderate at some point, and that’s exactly what we’re seeing right now.
As more homes have come on the market this year, price growth slowed – so, equity gains did too. And that doesn’t mean you’ve lost ground.
Putting it into Perspective
You probably still have far more equity than you did just a few years ago. And that puts you in a strong position if you want to sell. Here’s the data to prove it.
According to research from Zillow, home prices have risen a staggering 45% nationwide since March of 2020. That’s a big jump.
And in the majority of markets, prices are still rising, just at a much slower pace. But even in the metros where prices are experiencing the biggest declines (the ones making the headlines), the average drop is only about -4%.
So, what’s that really mean? In most places, prices are on the rise, so this isn’t even a concern. But in the few metros where prices are cooling off a bit, the 5-year gains more than offset those small dips.
In other words, these modest declines can’t erase years of growth. Homeowners who’ve been in their houses for several years are still way ahead. Big time. And that’s true pretty much everywhere.
Data from the Federal Housing Finance Agency (FHFA) helps paint this picture. Let’s cast a slightly wider net and look at a state-by-state level this time. Every single state has seen prices go up over the last 5 years. And that means homeowners in each state have much more equity than they did just 5 years ago (see graph below):
Odds are, in most places, if you’ve owned your home for more than a few years, you’ve already built the kind of equity many people could only dream about before the pandemic. And if you sell, you can use it to help you downsize, or move up.
And just in case you’re worried prices will crash and your equity will take a bigger hit in the near future, here’s what Jake Krimmel, Senior Economist at Realtor.com, has to say:
“The slight recent declines in aggregate value and total home equity are not cause for concern . . . Although the market is coming into better balance, large price declines nationally are extremely unlikely in the near term . . .”
The price moderation we’ve seen lately isn’t a cause for concern. It’s a signal of a market that’s finding its balance again after several years of unsustainable price growth. And after several years of major price appreciation, most homeowners are still in an incredibly strong position.
Bottom Line
Even with prices coming down in some markets, today’s homeowners are still sitting on near record amounts of equity.
If you’re wondering how much equity you have (or how far ahead you really are), connect with a local agent.
You might be surprised by what your home is actually worth today.
