Is Your Home Considered ‘Equity Rich?’

  • Karen E. Bail
  • 06/25/22

We all know it’s a seller’s market these days on the Big Island.

But Hawai’i’s ongoing real estate boom has been quite the boon to homeowners all across the state, with a record number of housing units becoming equity rich in standing and massively increasing their owner’s overall wealth.

What is equity, and how does it accrue?

First off, equity is defined as the monetary value of a property in excess of any debts still owed on the unit, such as a mortgage. In other words, equity represents the difference between a property’s current value on the open market and the amount its owner owes on the mortgagee and any other outstanding payments due. For example, if a homeowner owes $200,000 on their mortgage loan and their home is currently worth $800,000, then their property is said to have an equity of $600,000.

Equity, then, can increase in two distinct ways:

  • As a result of paying down your mortgage loan
  • As a result of your home increasing in value over time

OK, so what does equity rich mean?

As such, a home is considered rich in equity when its total value is worth at least twice what is still owed on the mortgage, or any other debs tied to the property. Per our example above, that lucky homeowner would now be considered equity rich, as their $600,000 in equity represents over half their home’s total current value on the market ($800,000).

Statewide, over half of all single-family units and condominiums were equity rich in the first three months of 2022, according to a recent analysis by ATTOM Data Solutions, a national provider of property and real estate data. 56.3% of all units in the Aloha State—an increase of 14.5% from 2021—met the criteria, with many of the island’s top neighborhoods leading the way. By way of comparison, only 44.9% of properties nationwide were considered to be equity rich in the first quarter of this year—though that’s still an increase of 13% year-over-year, not to mention a good sign that the looming housing downturn may not be in the cards after all.

The Bottom Line

Overall, the ever-increasing number of homes considered to be equity rich on the Big Island is great news for current homeowners and challenging news for first-time buyers. The real estate marketplace in paradise has historically always been a challenge for the uninitiated—which is why it’s so important to avail yourself to the services of a seasoned pro. With over forty years in the business, Karen Bail can show you all the ins and outs of the ever-changing Hawai’i real estate scene, helping you and your ‘ohana to secure the home of your dreams.

And current homeowners—if you’re curious just how much your current house might fetch on the open market, then let Karen Bail lead the way! Head on over to our home valuation page, where you can type in your address and get started on a free, custom quote to get the ball rolling. Aloha!

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Karen provides the most current and accurate market information, tapping into her vast network of industry professionals. She continually draws from her extensive marketing experience to offer creative marketing strategies and produce impeccably high-quality marketing materials.

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