Homeowners are sitting on $6 trillion in available cash, but they’re not tapping it

The big gains in home values over the last two years are starting to slow down, but U.S. homeowners are still reaping the rewards.

jumped more than expected.

“Gains in household wealth were cited by near record numbers, primarily due to increases in stock holdings and rising home values,” according to the report.

And the expectation is that homeowners will start to tap more equity in the coming year, especially for home renovation projects.

In 2018, remodeling spending by homeowners is estimated to increase by at least 5 percent in 41 of the 50 metropolitan markets tracked by Harvard’s Joint Center for Housing Studies, and by 10 percent or more in 11 of these major metros, led by Kansas City, Charlotte, North Carolina, San Antonio, Dallas and Sacramento, California. None of the 50 major metro areas tracked are projected to see spending decline in 2018.

That spending is expected to increase next year as well because fewer people are moving, due to higher home prices. There is still a critical shortage of homes for sale, and that is leading to more homeowners who might have wanted to move up, staying put. Also, as home equity rises, people want to protect their home — that is, their asset, more.

“When mobility is down, the longer you plan on staying in your home, the more you think about some of the less sexy projects,” said Kermit Baker, senior research fellow at the Harvard center. “That’s true for windows, HVAC, siding and less glamorous projects. More focus on replacement projects as opposed to discretionary projects.”

Remodeling spending is actually increasing more in the nation’s more affordable markets. That is likely because homeowners there have less mortgage and more equity in their homes. In the most expensive markets, homeowners are more leveraged and have less money left over to put back into home improvement projects. Also, the more expensive the home, the less likely it is to need upgrades.

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