March 26, 2019
Boston has had notoriously high housing costs for years and home values are skyrocketing even further. It’s making Greater Boston-area homeowners house rich and cash poor. But what does that mean?
It means homeowners have equity in their homes but little cash on hand for other needs, such as paying off debt or funding an education. In fact, a new study by Hometap shows 42% of homeowners are putting most of their income toward their homes.
However, before you feel the crunch to sell your home, consider other ways you can fund other life needs.
Of Middlesex County residents looking to move in the next five years, 50% say property maintenance and upkeep is driving their decision. It’s no surprise when the majority of earnings of Boston-area residents are going toward mortgage payments, turning other realities of homeownership—even basic maintenance and upkeep—into big stressors for 63% of respondents.
Realtor.com recommends saving 1-3% of your home value for an emergency home repair fund. Maintenance is often less costly than major repairs and is key to maintaining or even increasing the value of your home. While 77% of Boston-area homeowners have a budget to cover regular maintenance, only 52% have a budget to cover significant, unexpected home maintenance and repairs.
According to the study, Boston-area homeowners have lived in their home an average of seven years. When they first bought their properties, they cost an average of $403,887. Now, their approximate home values average $526,206.
Nearly half of respondents (40%) said that the majority of their net worth is tied up in their home and they can’t access it or would have difficulty doing so. If you’re feeling stress for similar reasons, you can relieve the burden by tapping into your home’s equity.
With a Hometap Investment, you can get cash in exchange for a share of the future value of your home with no interest or monthly payments.
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Home prices in the U.S. are rising rapidly, while employee wages are remaining stagnant. The result? American's today spend a higher percentage of their income on housing than ever before, making the saying "house rich, cash poor" truer than ever.