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    Why Home Equity Is a Bright Spark in the Colorado Springs Housing Market

    Why Home Equity is a Bright Spark in the Housing Market | MyKCM

    Given how we have seen more unemployment claims than ever before over the past several weeks, fear is spreading widely. Some good news, however, shows that more than 4 million initial unemployment filers have likely already found a new job, especially as industries such as health care, food and grocery stores, retail, delivery, and more increase their employment opportunities. Breaking down what unemployment means for homeownership, and understanding the significant equity Americans hold today, are important parts of seeing the picture clearly when sorting through this uncertainty.

    One of the biggest questions right now is whether this historic unemployment rate will initiate a new surge of foreclosures in the market. It’s a very real fear. Despite the staggering number of claims, there are actually many reasons why we won’t see a significant number of foreclosures like we did during the housing crash twelve years ago. The amount of equity homeowners have today is a leading differentiator in the current market.

    Read what Venterra Real Estate posted about the Colorado Springs Housing Market Update for April 2020.

    The Colorado springs real estate market only has 1.3 months of inventory, which is very low supply/available homes to purchase. The demand is still strong, even with COVD-19. Currently we are seeing homes sell (if priced right) within 24 hours, with 10+ offers. It is very competitive for buyers, making them write offers at their max budget, pushing prices higher. Monthly inventory is important to watch as this dictates the market environment. Low inventory suggest a Sellers market, which we are in right now. In a Sellers market, prices rise because of demand. Until we get 7+ months of inventory we will not see home prices level off or drop. The laws of supply and demand are here to stay. With all this demand and low inventory, your neighborhood benefits, the value of your home grows too.

    Today, according to John Burns Consulting58.7% of homes in the U.S. have at least 60% equity. That number is drastically different than it was in 2008 when the housing bubble burst. The last recession was painful, and when prices dipped, many found themselves owing more on their mortgage than what their homes were worth. Homeowners simply walked away at that point. Now, 42.1% of all homes in this country are mortgage-free, meaning they’re owned free and clear. Those homes are not at risk for foreclosure (see graph below):Why Home Equity is a Bright Spark in the Housing Market | MyKCMIn addition, CoreLogic notes the average equity mortgaged homes have today is $177,000. That’s a significant amount that homeowners won’t be stepping away from, even in today’s economy (see chart below):Why Home Equity is a Bright Spark in the Housing Market | MyKCMIn essence, the amount of equity homeowners have today positions them to be in a much better place than they were in 2008.

    Bottom Line 

    The fear and uncertainty we feel right now are very real, and this is not going to be easy. We can, however, see strength in our current market through homeowner equity that was not been there in the past. That may be a bright spark to help us make it through.

    Thinking of Selling you Colorado Springs home? Get a free home valuation today CLICK HERE

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