Chicago homeowners don’t have as much equity as we’d like
Have you built up a lot of equity in your Chicago home? If so, consider yourself fortunate. You’re a bit of a rarity.
That’s according to a recent story by Crain’s Chicago Business. According to the story, which cites numbers from Attom Data Solutions, only 16.1 percent of Chicago-area home borrowers had built up 50 percent or more in equity.
Your home’s equity is the difference between what you owe on your mortgage and what your home is currently worth. If you owe $150,000 on your loan and your home is worth $200,000, you have $50,000 worth of equity.
Attom calls homeowners who owe half or less of their home’s value as “equity-rich.” And of the 20 largest metro areas in the country, Chicago had the smallest percentage of equity-rich homeowners at the end of last year, according to Attom’s research.
Nationally, a higher 25.6 percent of homeowners with mortgage loans were considered equity-rich at the end of 2018.
Why are so few Chicago-area homeowners rich in equity? You can point to the slower growth in home values here. Yes, home prices in Chicago have been rising steadily for several years. However, price increases here have been more modest than they’ve been in other parts of the country. Because prices haven’t risen as quickly, fewer owners here have been able to built up equity at a quick pace.
To be clear, though, Chicago homeowners are building equity. They’re just not building it as quickly as they might be in areas in which home prices are soaring. If you own a condo or single-family home in Chicago, know that as you make your monthly mortgage payments, the odds are high that you are building equity. As long as your Chicago home doesn’t lose value, you will increase your equity.