A substantial number of homeowners in the U.S. may not be aware of how much their homes have risen in value over the past few years, according to a report from Fannie Mae which looked at data from the National Housing Survey. Here’s the story from HousingWire.
Although home prices have risen around 20% since mid-2011, many homeowners are highly unaware of the true value of their home.
According to a study by Fannie Mae, this could be creating a roadblock in the housing market since it is stopping people from buying move-up homes.
“If homeowners believe that large down payments are now required to purchase a home, then widespread, large underestimates of their home equity could be deterring them from applying for mortgages, selling their homes, and buying different homes,” the report stated.
Fannie’s report looked at data from the National Housing Survey, which pulled a national representative sample of U.S. adults in order to calculate the percent of mortgaged households who perceived they had negative home equity.
Despite a significant rise in home prices, survey respondents still perceived that they had negative equity.
On the other side, borrowers also wrongly assumed how much their home equity had grown.
Fannie explained that one side effect of this is that homeowners who underestimate their homes’ values also likely underestimate how large a down payment they could make with their home equity, their chances of qualifying for mortgages, and, therefore their opportunities for selling their current homes and for buying different homes.
