Study Says Starter Home Equity Growth Is Leading Most Markets

Starter homes, typically the most affordable homes on the market, have seen an 8.5 percent gain in value over the past year, the biggest increase found in a new analysis by Zillow.

Over the past five years, starter homeowners have seen even larger gains in value. Equity grew by 44.4 percent, almost double the value gained by homes at the highest price range in the market, per CBS News. Zillow's senior economist Aaron Terrazas noted that since the housing crash, "demand for less expensive, entry-level homes has built steadily, causing prices to grow rapidly. Homeowners have been able to build wealth at a faster pace than owners of more expensive homes."  

One unfortunate aspect, however, is the very factors making the cheapest homes a good investment is that they are in limited supply, with nearly 18 percent fewer entry-level homes on the market compared to a year ago, Zillow said. Americans buying starter homes in Tampa, Florida, saw the greatest gains in home equity, with the least expensive homes in the city worth 20.4 percent more than a year ago, Zillow found.

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