Rising home sale prices are boosting equity value for Chicago homeowners. CoreLogic reports that Illinois homeowners saw an average gain in equity of 14% from first quarter 2020 to first quarter 2021.
However, when it comes to home equity, a rising tide doesn’t necessarily lift all boats. While Illinois home equity increased on the average, some homeowners in the Chicago area are still underwater in home value. When comparing all homes with an outstanding mortgage, about 6.1% of homeowners have negative equity in Chicagoland. Nationally, about 2.6% of homeowners have negative equity.
If home sale prices are rising, how can so many homeowners have negative equity? Great question. It comes down to what your property is worth on the market today, and how much your outstanding mortgage debts and liens are against the property. Equity is the difference between what you owe on your home, and how much you could sell it for today.
Just as equity can increase due to locally positive sales trends, it can also suffer if you have locally negative sales trends. Homes can lose value if the comparable sales around them show falling prices. Nearby sales activity involving distressed properties – like foreclosures, bankruptcies and short sales – can pull down the sale prices of neighboring homes.
Economic changes can affect the market too. The Great Recession knocked home values down significantly in some areas of Chicagoland. Some homeowners who bought at the height of the market – with little or no money down – are still underwater in their home value.
Here are some ways to help maintain and improve your home equity:
- Avoid over-paying for a home when you buy
- Make a decent down payment
- Pay your mortgage on time
- Make additional payments to the principal balance of your mortgage
- Pay attention to home and yard maintenance – make needed repairs promptly
- Make cost-effective improvements to your home
- Avoid the temptation to borrow against your home value, unless absolutely necessary
If you would like to obtain your home’s market value and see where your equity stands today, contact us for your personal consultation!
StartingPoint Realty – your Chicago area real estate experts!
StartingPoint Realty serves first-time home buyers and sellers throughout Chicago and the suburbs!
Buyers: get an introduction to home buying by attending our free home buying webinar!
Sellers: we have qualified buyers in virtually every price range! When you obtain a home selling consultation with StartingPoint Realty, you get our expert insights about today’s home buyers and their purchase power. We may have buyers lined up waiting for a home like yours!
Always feel welcome to contact us for help with your Chicago real estate questions!
Ryan Gable Broker/CEO Starting Point Realty
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