People who bought a home in 2012–generally regarded as the lowest point in the post-Great Recession housing market–have earned a median $141,000 or 261 percent in home equity over the past seven years, according to a new data analysis from Redfin.
The typical home that sold in 2012 carried a median sale price of $210,000, but as of this month the estimated value is $320,000. The typical 2012 homebuyer started off with $54,000 in home equity, but today enjoys $195,000. Redfin’s finding was based on an analysis of the home equity earned from roughly 1.4 million homes purchased across 138 markets in the U.S. in 2012.
However, some housing markets have seen greater gains than others, especially the expensive California markets where home values have increased by at least two-thirds and the typical homeowner has earned more than $300,000 in equity since 2012. Metro areas near large U.S. military bases also saw massive increases in home equity, due primarily to the predominance of VA and FHA loans that carried minimal or no down payments that resulted homeowners carrying very low home equity seven years ago.
"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 down payment," said Redfin Chief Economist Daryl Fairweather. "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. 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."