Transforming Price Surges Into Dollars
Your stocks or mutual funds may--or may not--have gained much in value this year. But unless you live in one of a handful of places around the country, you can be certain of this: Your home racked up solid appreciation gains in the last 12 months--5.3 percent on average nationwide, and 8 percent to 9 percent in the hottest statewide markets, such as Massachusetts, Minnesota and Colorado, plus Washington, D.C.</br></br>And unlike your stock market profits, there's an extra layer of icing on top of your home's appreciation: It's tax-free, and it can be readily converted to cash if you need it--which is what growing numbers of American consumers are doing.</br></br>Two new national statistical studies highlight the continuing, impressive jumps underway in home values, and how owners are turning at least some of that appreciated equity into spendable dollars.</br></br>The first study, prepared by a federal agency that monitors the housing economy, documents what gleeful homeowners and sellers suspected: Inflation in most goods and services may be in the range of 1 percent to 2 percent a year, but home values are jumping at four to five times that pace. According to the latest data from the Office of Federal Housing Enterprise Oversight, even three of the four slowest-appreciating markets--Nevada, Pennsylvania and Idaho, with gains in resale value of 3 percent or less--are beating inflation in the overall economy. (Hawaii posted a scant 0.1 percent appreciation rate during the last 12 months.)</br></br>Massachusetts continues to lead the nation's resale-value boom, with a 9.3 percent average rate of gain per house in the last year, and nearly a 30 percent increase over the last five years. That's especially impressive given Massachusetts' already high-cost housing stock. If you bought a $300,000 house outside Boston last year, it's probably worth about $327,000 today. If you bought it in 1994, it's probably worth about $386,000. Other relatively pricey home real estate areas are not far behind.