■ By Matt McPherson / Columnist
Equity in property continues to rise every month and is expected to peak toward the end of summer now that interest rates are slowly creeping upward. The urge to sell is greater than it’s been in the last decade, now that owners can convert their equity into liquidity.
Many property owners, such as growing families looking to upsize, are tapping into significant profits from home sales and leveraging into larger, more expensive houses. Home Equity Lines of Credit (HELOC) are extremely popular with millennials, leading the pack ahead of Generation X and baby boomers.
More than 33 percent of millennials are considering applying for a HELOC in the next 18 months with intentions of consolidating credit card and college debt, along with making some home improvements.
In 2016, more than 39 million homeowners had the power to tap into available equity, which is driving younger generations to refinance, but the same rise in prices seems to be discouraging millennial first-time buyers. Home builders understand this and are beginning to cater to this market segment.
Investors bought up millions of homes during the recession and opted to rent out rather than sell, resulting in an extremely low inventory of starter homes on the market. In March, the national median price of a new home was $315,000 – much higher than the median price of existing homes at $236,000. Builders looked at the move-up buyer as a significant factor when building and pricing their homes. With the demographic shifting, builders now are focused on new millennial buyers to help foster the growth.
Construction is still 18 percent lower than its 25-year average, attributable to renters not moving out to buy homes in large numbers. FICO scores and credit risk are still major factors for borrowers in securing loans. Student loans and lower incomes continue to stymie the expected surge of new home buyers, while significant savings may allow for large down payments.
In April, the median home price in Hemet was $223,156, which is up from $209,437 over 12 months. This is a rise of seven percent in value and still a very healthy recovery.
San Jacinto home prices averaged out at $238,897 in April and up from $230,688 from the previous year. A four percent increase in value in San Jacinto suggests the climb in home values may be approaching a plateau toward the fall and winter months.
More than twice as many properties in Hemet does affect the average and leaves a huge potential for increased values over the coming months. The large proportion of houses in the valley which are categorized as Hemet-owned, might have contributed to lessening the overall median home price in the valley. Stay tuned for future articles as the local real estate market persists through the summer months with new construction headed our way.
Matt McPherson is a licensed real estate agent with Coldwell Banker Associated Brokers, BRE # 01362837. Reach him at 951-315-7914 or McPhtown@aol.com.