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The Real Deal
The typical homeowner has $50,000 in equity
Home is where the largest portion of wealth resides for three out of four homeowners, and many use the value of their homes when making important financial decisions, according to a recent survey on the effect of home wealth conducted by the National Association of Realtors.
The study shows the accumulation of value in home equity or unrealized gains has measurable effects on behavior. "Our survey finds that 16 percent of people with unrealized capital gains have changed their spending or saving behavior as a result. By contrast, a study by the Federal Reserve suggests only 3.4 percent of holders in stock equity have changed their spending or saving behavior," said the association's chief economist, Dr. David Lereah.
Financial resources and security are just some of the benefits of a build up in home equity. "Homeowners use their home equity to get cash for emergencies as well as the purchase of big-ticket items," Lereah said. "In addition, the capital gains people realize from the sale of their home are a significant source of down payment funds for most repeat buyers, but are used for other purposes as well."
According to the survey, the typical homeowner has $50,000 in accumulated equity. Households with incomes greater than $75,000 typically have a median of $100,000 in equity, while households earning less than $40,000 have a median of $40,000 in equity. Households with inhabitants age 50 or older have a median equity of $80,000. Since these are national statistics, the amounts can be higher or lower in different geographic locations.
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Cupertino, California Since 1947
