The typical homeowner who bought property in 2012 when prices reached their lowest point following the Great Recession has earned $141,000, or 261 percent, in home equity, according to a report by Redfin.
Collectively, people who purchased homes in 2012 have earned a total of $203 billion in home equity, the report found. Redfin said the typical home that sold in 2012 has increased $110,000 in value, from a median sale price of $210,000 in 2012 to an estimated value of $320,000 in September 2019. The typical 2012 homebuyer started off with $54,000 in home equity and has $195,000 today.
“The opportunity to build wealth through home equity when prices hit their low point was available only to a fortunate subset of Americans who had enough cash for a downpayment,” Redfin Chief Economist Daryl Fairweather said in a press release. “And now many people who weren’t able to buy into homeownership during that window of time find themselves on the other side of the housing market coin: Many areas are just plain unaffordable for people who don’t have equity built up to trade in for a new home.
“And those who are waiting in the wings, hoping to buy a home when the next recession hits, probably won’t be as lucky as buyers were in 2012,” Fairweather added. “Even if home prices do come down slightly, the housing market won’t be impacted nearly as much as it was during the Great Recession, and home equity gains won’t be nearly as big.”
According to the report, the areas with the biggest total home equity gains since 2012 are Los Angeles ($15 billion); Seattle ($8 billion); and Oakland, Calif. ($7.9 billion). Areas near large U.S. military bases also have seen large percentage increases in home equity, including Tacoma, Wash. (1453 percent) and Virginia Beach, Va. (1333 percent).
“Just like many other places around the country, the Hampton Roads area, which includes Virginia Beach, was hit hard during the Great Recession,” Redfin agent Jordan Hammond said. “But because there’s such a large military presence in Virginia Beach and its surrounding cities, our housing market will always be one of the most stable in the country.”
Nine of the 10 metros with the biggest median home equity growth in dollars are in California, led by San Francisco ($741,000); San Jose ($669,000); and San Rafael ($604,000). Seattle ($364,000) is the only non-California metro on the list.