The National Association of Home Builders (NAHB) Remodeling Index, (yup, another index), rose 3 points in the fourth quarter of 2017. This is its highest level since 2001.
In fact, for the past 19 quarters, this index indicates there are more remodelers reporting increased activity than aren’t. This indicates many homeowners are upgrading their homes.
This may indicate that some are getting ready to sell, while others may have decided to stay put. Either way, presents some opportunities for lenders.
To tap the equity for the money needed, homeowners may take a cash-out refinance or take out an equity loan. With the new tax rules eliminating the interest deduction for HELOCs, some homeowners may choose the cash out refinance, on which the interest paid is still deductible.
Depending on interest rates and the amount needed, others may choose to go the HELOC route. With their equity already increased and home values on the rise, a small investment in an upgraded kitchen or bath or energy improvements could pay big dividends in a quicker sale at a better price.
Home demand is on the rise, increased equity will provide existing homeowners the opportunity to sell now and move up into a larger home by providing them with more money for a down payment.
In addition, an improving economy and tax reforms will put more money in many new potential homebuyer’s pockets, providing them with a better shot at homeownership. It’s all a matter of economics and desire.
Presently, there are more than 40 million homeowners aggregating more than $5.4 trillion (that’s with a ‘T’) in available equity. That’s a whole lot of borrowing power and lending opportunities.
Don’t let the reports of low home inventories and forecasts for decreased mortgage lending get you down in the dumps. There is more than one way to skin a cat. (No cats were harmed in writing this blog, nor will be harmed through equity financing.)
Be ready, stay alert and get prepared to serve the needs of those homeowners who will be looking for the financing to upgrade their home, either to stay or sell.
While doing so, don’t forget those who can use their equity for other purposes like restructuring credit card debts, paying off of student loans, or retirement investments.
Just a few more options for business in 2018.