Affordable homes outpace higher priced properties in equity growth
Entry-level homes have seen their equity grow faster than residences with higher properties in recent years, according to research by the real estate site Zillow.
The report found that homes in the bottom third tier of median prices gained 44.4 percent in equity over the past five years. By comparison, homes with median prices in the top third of the price range gained only 26.6 percent in equity.
Over the course of the past year, the most affordable segment of the housing market gained 8.5 percent in value. The typical equity gain among the most expensive homes in the same period was 3.6 percent.
Zillow says the result is an indicator of how homeownership can help boost personal wealth. However, the site says it also points to the persistent problem of low housing inventory driving up prices, with high demand for affordable homes at the lower end of the price scale and a limited number of these properties available for purchase.
According to the most recent existing home sales report from the National Association of Realtors, the number of homes for sale in January stood at 1.52 million. This was down 9.5 percent from January 2017, making it the 32nd consecutive month of year-over-year inventory declines.
Zillow says this trend has hit more affordable homes particularly hard, with the supply of homes priced in the lower third of the market down 18 percent from the previous year. The inventory of homes whose prices put them in the top third of the market was down 4.9 percent.
The report from Zillow found that lower priced homes gained 20 percent in value over the past year, the most rapid gain among the largest metropolitan areas in the United States. In Las Vegas, homeowners with affordable homes typically gained 19.9 percent in equity.
Seattle and the Bay Area of California were the only large metropolitan areas where equity growth in higher priced homes was outpacing the increase in value among lower priced homes.
MOST VIEWED MEDIA