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According to a recent survey by Demos, a public-interest research group, Americans own less of their homes than ever before. On average, current home owners have 56.3% equity in their homes according to the survey. That compares to an average equity of 68.3% in the early 1970s and higher than 80% in the 1950s.
There seem to be two factors that are causing this decline in equity. First, most homeowners are beginning with much less equity in the home from day one. The standard down payment of 20% that ruled in the past is no longer applicable today. According to the National Association of Realtors, less than 50% of all new homeowners now start off with a down payment of 20% and it's possible to obtain financing for 100% or more of the home's value.
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The other reason is that while home prices have soared and should have made the equity in them also increase, many families have been refinancing their loans to take much of the increased equity out. This year it is estimated that families will take over $150 billion worth of equity out of their homes.
There seem to be two factors that are causing this decline in equity. First, most homeowners are beginning with much less equity in the home from day one. The standard down payment of 20% that ruled in the past is no longer applicable today. According to the National Association of Realtors, less than 50% of all new homeowners now start off with a down payment of 20% and it's possible to obtain financing for 100% or more of the home's value.
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The other reason is that while home prices have soared and should have made the equity in them also increase, many families have been refinancing their loans to take much of the increased equity out. This year it is estimated that families will take over $150 billion worth of equity out of their homes.
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