How Does an Increase in Property Value Affect Your Bottom Line?
Seattle area home sales have increased in the last year and home prices have increased in the last month. If you have been following this blog or even the real estate news for the Seattle area, you learned that home price increased by 10% last month. This was fueled by the shortage of inventory and a large group of buyers—the age-old supply-and-demand axiom at its best.
What does that translate to in dollars? On a home valued at $300,000 a 10% increase raises the sale price to $330,000, effectively putting $30,000 more into the pocket of the seller. Unfortunately, the buying power of a home buyer is decreased by 10%. If you are fortunate enough to have bought a home last month you would have an increase in equity of 10%. In the above example you would have $30,000 in equity in just a month. Pretty good investment, isn’t it?
No wonder Peter Lynch said that the greatest investment you can make is “a single family home.”