Many Boston North Shore home improvement projects are taking shape thanks to rising home values. There’s probably no greater investment opportunity over the long run than the growth in real estate equity. As a result, many homeowners are taking advantage of the opportunity to use that equity to fund home improvements by refinancing their mortgages.
Why is the Boston North Shore Home Improvement Market Booming?
Financial analysts report refi’s increased 68% in the second quarter of 2015 compared to 2014, the highest volume since 2010. Insiders say this is due in part to homeowners being able to access their equity more easily — and more inexpensively — and they are capitalizing on their home’s appreciation while values are higher and interest rates remain low.
One major beneficiary of the equity refinancing phenomenon is the Boston North Shore home improvement market. Increased home prices — along with the threat of rising interest rates — coupled with fewer homes available for sale, has made more homeowners content to stay put in their existing homes. And, when potential home buyers do this they tend to tackle previously-shelved remodeling projects.
Boston North Shore home improvement contractors have enjoyed good business so far in 2015. Remodeling projects have been revived by homeowners flush with new-found equity turned into available cash. In addition, industry insiders predict remodelers will see a 10% or more increase next year.
It’s estimated that homeowners have gained nearly $1 trillion in home equity during the past year, averaging roughly $65,000 on a cash-out refinance. And, experts say, that’s more than enough to undertake a number of Boston North Shore home improvement projects ranging from room additions to kitchen upgrades and most everything in between.
When homeowners are less likely to move due to the availability of new or comparable homes they often elect to perform improvements previously on the back burner. Luxuries such as backyard patios, outdoor kitchens, decks and patios and even swimming pools are within financial reach to many by way of equity gained from refinancing. While the dollar amount is significant, it still represents a lower loan-to-value ratio (LTV) of, on average, 68% — much less than of a decade ago. What this means is, homeowners are in a more grounded equity position than that of their peers during the most recent housing crisis, where many borrowers were “upside down” in their LTV ratios.
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