Price Gains Boost Homeowners’ Bottom Line

One of the traditional arguments in favor of homeownership is that it helps build wealth. That’s based on the fact that, as you pay your off your mortgage, you are gaining an ever-larger percentage of ownership. The other part of that equity equation is dependent on rising home values. When prices go up, a homeowner benefits from the ability to sell their house for more than they paid for it. Over the years, steady price increases and regular mortgage payments could help homeowners boost their bottom line. Unfortunately, when the housing market turns downward – as it did following the housing bubble – homeowners are also on the hook for any losses in value. The good news, however, is that buying a house is typically a long-term investment and things tend to bounce back. In fact, much of the housing market’s most recent losses have been reversed. New numbers from CoreLogic show the number of homeowners still suffering from negative equity is dwindling. In fact, 92.9 percent of all mortgaged properties now have positive equity. Frank Nothaft, CoreLogic’s chief economist, says price increases have played a large role in reducing the number of owners who owe more on their mortgage than their home is worth. “The CoreLogic Home Price Index for the U.S. recorded 5.2 percent growth in the year through June, an important reason the number of owners with negative equity fell by 850,000 in the second quarter from a year earlier,” Nothaft said. More here.


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