Time to Lower Your Home Equity Estimate?

Most of us have some idea in our heads about how much our house is worth and we know the rough balances on our mortgage(s), so we have a “net worth” figure in mind.

Over the last few years many people have been cashing in some of that net worth with home equity loans. When their home price goes up, they raise their estimate of net worth and decided whether or not to borrow against it.

This may be a good time to pull back. The bubble may not have burst, but it appears to be slowly deflating.

Existing home sales (which account fior about 80% of the residential market) fell 2.8% in January according to the National Association of Realtors. The number of unsold homes increased to 2.91 million, a 5.3 month supply, the largest in almost eight years.

Condominium sales fell 10.6%, and the average sales price dropped to $216,900 down from $225,200.

“The boom is over” said the NAR’s chief economist.

At the same time, the index of consumer confidence dropped to 101.7 in February, down from 106.8 in January.

If you are in one of the hot markets (and if you are, you know it) I think you should expect a 15% to20% drop in your house’s market price over the next few years.

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