Have you ever put on a pair of pants or a jacket you haven’t worn in a long time only to reach in one of the pockets and find a $20 bill you had no idea was there. Despite the fact that you feel $20 richer, it was in the pocket the whole time, albeit unbeknownst to you. That is kind of what is happening to many homebuyers with their home equity right now, just on a much larger scale.
According to a survey conducted by Omniweb and commissioned by loanDepot, 57 percent of homeowners said they believe their home value has improved in the last three years, but 80 percent underestimated the amount of value it has gained, CNBC reports.
Over 25 percent of the 1,000 borrowers who were surveyed and said they believed their homes gained value said it had increased between 1 and 5 percent since 2013. That estimation is well below the national average of 10 percent for home value growth since 2013.
It is believed this misconception many owners have about the value of their homes may be behind a very low volume of new equity lines of credit. The dollar volumes of home equity lines of credit in the first three quarters of 2015 were barely a third of what they were at the peak in 2005.
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