It was a good time to be a home buyer in 2012. Homeowners who purchased a home the year prices bottomed out have earned a median of $141,000—or a whopping 261%--in home equity, a new analysis from Redfin concludes. In the majority of housing markets nationwide, the year 2012 offered home buyers the lowest purchase prices following the Great Recession.
The average home that sold in 2012 has risen $110,000 in value—from a median sales price of $210,000 in 2012 to an estimated value of $320,000 in September 2019. The average 2012 home buyer started off with $54,000 in home equity and now has $195,000 today, the report concludes. For its analysis, Redfin researchers looked at the home equity earned on about 1.4 million homes purchased across 138 markets in 2012.
“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,” says Daryl Fairweather, Redfin’s chief economist. “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.”
The biggest equity winners from 2012 home purchases tended to be near large U.S. military bases. Tacoma, Wash., and Virginia Beach, Va., saw the biggest percent increases in home equity since that time—1,453% and 1,333%, respectively.
But the biggest equity winners by growth in dollars was mostly in coastal markets in the West, where home values have risen by at least two-thirds and the typical homeowner has earned more than $300,000 in equity since 2012, the report notes. The metros with the biggest total home equity gains in dollars are Los Angeles ($15 billion), Seattle ($8 billion), and Oakland, Calif. ($7.9 billion).
Source: “Together, Homebuyers Who Bought at the Bottom of the Market in 2012 Have Earned $203 Billion in Equity,” Redfin (Sept. 26, 2019)
