The Dynamics of Home Equity
For many people, their home is their largest asset and their best performing investment. The equity in a home is the difference in what it is worth and what is owed. Two dynamics, appreciation and unpaid balance, work in concert to make homeowner's equity grow. It can be said that you appreciate the fact that your home is your best financial investment. It is also ironic that the appreciation, the increase in value, is what causes it to be your best financial investment. In a one-year period, the increase in value divided by the beginning value will determine the rate of appreciation for the year. News stories and articles, frequently, report statistics on appreciation for the month, the year or longer. In many cases, a national appreciation is mentioned but the local appreciation is more reflective of an individual property. The National Association of REALTORS® reports " The median existing-home price 2 for all housing types in June was $363,300, up 23.4% from