A new report by Kenneth R. Harney in www.latimes.com delivers some positive news about the real estate industry: that home equity is growing. After hitting a low of $6.45 trillion in the final quarter of 2011, Americans’ combined home equity jumped 20% during the next nine months to $7.71 trillion. In sum, home equity is growing again after years of downward trends. After hitting a low of $6.45 trillion in the last quarter of 2011, nationwide home equity jumped over $1 trillion during the first three quarters of 2012 to a level of over $7 trillion. This represented a 20% gain. A homeowner’s equity is the difference between the market value the property and the amount of mortgage still owed. For example, if a home on the market can sell for $500,000 and the amount owed on the mortgage is $300,000, the home equity is $200,000.
For Brea residents, the best part of this news is that California home owners saw the biggest gain in home equity: over $122 billion. As Harney points out, “the odds are good that even if you own a home in a market that experienced severe price declines during the housing bust, the value of your home rose last year, at least modestly. Even if you have negative equity, it’s likely that, thanks to appreciation in your area and your continuing payment of principal on your mortgage, your equity position improved.”
The reasons for this sudden gain in home equity are myriad but the main factor is a general acceptance by buyers and investors that prices have finally bottomed out and will not sink any further. Prices are now rebounding in time with renewed demand, creating a large and rapidly gaining correction in Orange County real estate and cities like Brea and Fullerton. Already a desirable area to work and raise a family, Brea is now proving to also be a sound investment vehicle. Call me today to find out how you can catch this real estate trend.