Home Equity Gains Raises Move-Up Buying Activity

Real estate data firm, FNC, states that as home equity improves, move-up buyers - homeowners who decide on selling their current property to purchase a pricier home – are now creating movement in the market. 

(source: Flickr)

 After news of gaining home value on rising equity, homeowners are now capable of providing a larger down payment for prospective pricier homes. Rising mortgage rates is a driving factor for all this market movement. The fear of seeing mortgage rates rise even more causes move-up buyers to take action before it’s too late. According to RealtyTrac vice president, Daren Blomquist, "In addition, we show 8.3 million homeowners who are on the equity fence, and should have at least 20% equity in the next 15 months if home prices continue to appreciate at the same rate we’ve seen over the past 15 months.” The 20% equity being the main reason why there is a surge in turnover activity, evidencing recovery in the market. "An important sign of a healthy and sustainable recovery is increased housing turnover driven by trade-up buying, which is more or less discretionary spending,"states FNC Research Director Yanling Mayer. California Association of Realtors Vice President and Chief Economist Leslie Appleton-Young also states in an equity report that the equity sales increase reflect a transitioning market from homes that are investor purchased to “primary home purchases” by households. She also adds, "The market continues to improve as more previously underwater homes gain equity due to recent upward movements in price."