No Equity, No Problem
By JD Esajian on September 5, 2013
The damage from the real estate market collapse is still being felt some five years later. With all the news of home values rising and increased home sales, many homeowners still owe more than their homes are worth. If you bought in the year before the market collapsed, you bought on the highest side in recent history. When things went south, those were the properties to fall the farthest and the fastest. Depending on what your intention is with the property, this may not be a bad thing.
It is nice to have the security of available equity. You can tap into it in case of emergency, but it really isn’t necessary. If your goal is to hold onto the property long term, the truth is you really don’t need equity. The market works in ebbs and flows and we are currently in a period of slow recovery. Whether or not this is the start of the market taking off, or sputtering along for years, really isn’t important to you. You are looking at the pot of gold at the end of the rainbow and what happens in between shouldn’t mean that much to you.
Too many homeowners took advantage of their new found equity for vacations, cars and swimming pools instead of using it to improve the value of their homes. The fact that they do not have this equity to use could be the best long term thing to ever happen to them. Do not worry about where the market is now or what your property value is from month to month. Look at the big picture and look to see that you are in a good neighborhood with a growing economy and solid employment potential. If these signs are there, you can be sure that there will be equity down the road.