Home increasing in equity this winterAlthough the winter season traditionally is not a good time to sell a home, homes should gain more equity this winter and sell for higher price points.

Homes will likely gain more equity over the winter thanks to buyers seeking low mortgage rates and home prices being on the rise. Turn-key homes are likely to see the greatest increases as buyers search for homes that do not need much work before move-in.

Buyers Seeking Low Mortgage Rates

Low mortgage rates are one of the driving factors behind an increase in buyers looking to purchase homes. Mortgage rates in 2020 are at record-breaking lows.

As of November 5th, 2020, Freddie Mac reports the average 30-year fixed-rate mortgages dropped to 2.78 percent, which is significantly lower than the 3.69 percent level reported at this same time in 2019. Furthermore, 15-year fixed-rate averages decreased to 2.32 percent from 2019’s 3.13 percent.

The beginning of the coronavirus pandemic saw the home-buying market stall out temporarily, causing the Federal Reserve to take action to keep markets stable. According to The Washington Post, part of this action was to purchase mortgage-backed securities, a policy the Federal Reserve plans to continue adhering to until 2023.

Both the drop in mortgage rates and the mortgage-backed security buy-back policy have contributed to continued buyer interest.

Home Prices on the Rise

As mortgage rates continue to decrease and mortgage applications increase, homeowners are expected to see greater equity increases on their property. Continued demand paired with tightening supply is driving both home prices and home equity up.

Related: Home Affordability Hits Highest Level in 3.5 Years Nationwide

According to CoreLogic’s Home Equity Report, home prices were up 4.3 percent from September 2019 to September 2020, with expectations for even more gains over the coming months. Additionally, the report shows that homeowners with mortgages are seeing their homes grow in equity by 6.6 percent, bringing the collective equity gain to around $620 billion, or around $9,800 per homeowner.

Understanding Home Equity

Home equity is defined as being the difference in a home’s value versus the value of any outstanding mortgage loans. For instance, a home valued at $300,000 but has $100,000 worth of outstanding mortgages would have an equity of $200,000.

Therefore, as home prices rise, so does the amount of equity each homeowner holds. This equity can work in the homeowner’s favor, especially when it’s time to sell the home. The amount of equity the homeowner has accrued through mortgage payments is essentially a profit that can then be used to place larger down payments, and with larger down payments come lower mortgages.

Move-In Ready Homes Highest in Demand

With demand for homes outweighing supply, it is unlikely homeowners will face too much trouble selling their properties at their original asking prices in the hottest markets around the nation. Nonetheless, some home features put them in higher demand. According to Realtor Magazine, move-in ready homes hold the highest demand and include such things as:

  • Limited to no required renovations or repairs
  • Outdoor space with high levels of privacy
  • Additional rooms optionally used as learning areas or home offices

Buyers Seeking Virtual Options

Homebuyers are also more likely to seek out homes for purchase that offer virtual tours and proceedings. This appeal to virtual service has risen especially due to the Covid-19 pandemic, as home buyers look for potential property investments that can be viewed remotely and safely.

In turn, homeowners will likely need a real estate company’s assistance to sell their home, unless the homeowner has specific expertise in virtual showings and proceedings. High-quality videos, photos, and interactive features are a must for the current buying atmosphere. It is important for homeowners working with realty companies to seek out those companies that have committed themselves to adapt to changing demands from the market.

Related: Why Do You Need a Real Estate Agent?

Final Thoughts

With mortgage rates at all-time lows, the winter of 2020 is shaping up to be a great time for equity building and selling a home. Homes are predicted to stay up in price as the Fed continues its monetary policies that have allowed mortgages to remain low.

Now is a great time to sell a home for a high price. As market trends in winter 2020 continue to point towards equity increases, homeowners looking to sell or upgrade can take advantage of the favorable conditions for a better sale price and a faster closing time.

Marimark Realty

Marimark Realty, home to the top South Tampa Realtors, focuses on providing a personalized experience for buyers and sellers of real estate. As a full-service real estate agency, we help clients with luxury homes, homes for first-time homebuyers, commercial property, and investment property.

To begin the journey of purchasing or selling your home, or purchasing commercial or investment properties, contact us at your earliest convenience.