A common theme amongst investors is where to stash money – stock market or real estate? Simply put, a stock is a share in a company where it is expected to generate a return. Similar to stocks, investing in real estate will show returns, but usually in the form of equity, or appreciation.
What exactly is real estate appreciation?
Real estate appreciation is the increase of your home’s value over time – the cycles of appreciation naturally ebb and flow. In order to get an accurate representation, the average timeframe for analyzing appreciation cycles is about ten years.
That doesn’t necessarily mean homeowners must wait that long to see gains in their properties, though. In fact, home values have soared in recent years: In January 2022 average nationwide real estate appreciation reached 19%, the highest level in 45 years. While there are signs that things are starting to cool off, borrowers purchasing now still have a leg up in taking advantage of equity in the next few years.
How to add value as a current homeowner:
One of the best ways to increase home appreciation is by refinancing and reinvesting. Once the home has gained a certain amount of equity (this timeframe can vary depending on the market) the borrower can take a cash-out refinance – essentially cashing in on the equity built in the home. This cash can then be rolled back into the home as a major remodel, or used as a down payment for another investment property.
If you have any questions surrounding equity appreciation and how to make the most out of your real estate investments, give us a call at (760) 930-0569 and one of our loan officers will assist you.