San Francisco Homeowners Using Equity Differently This Time Around


Home equity is hitting historic highs, thanks to a red-hot Bay Area market. As a result, which is no surprise – more people are now starting to tap that cash to spend on a variety of things. Some of it is eerily similar to the last housing run-up in the early and mid 2000’s. Others, though, are being a bit wiser with it by trying to make their homes even more valuable.

Renovation spending is soaring, and 80 percent of borrowers taking out home equity lines of credit say they would consider using that money to renovate their home or condo.  Remodel and home addition permits at the planning department for not only San Francsico, but surrounding cities is through the roof.  Materials are also being purchased with greater intensity at retailers like Home Depot and Lowes.    Remodeling spending topped $152 billion in 2017, and renovations for owner-occupied single-family homes will increase 4.9 percent in 2018 over 2017, according to the NAHB. That does not include remodeling done by investors looking to flip or rent properties, both of which are increasing as well.

An older housing stock – like the that one that exists here in San Francisco – combined with not enough new homes being built, means more people will choose to renovate.

Homeowners are also using home equity cash for education expenses and to pay down other debt in order to lower monthly payments, but there is a new and increasingly popular use: taking the cash out to make more cash.  Homeowners here are growing more and more confident in the overall markets and this is stimulating intrigue to get money working in other areas outside of the home itself.  With rates being as low as they have been, people feel they can truly generate a return on their money at a rate greater than the cost of borrowing it.  Investment opportunities such as cryptocurrency trading are quickly becoming big dinner conversations

Similar to the last housing price/equity run up from years ago, there is now a strong confidence among borrowers that home values will continue to rise, making it less likely that borrowing against their homes even more will not end up putting them underwater on their mortgages in the future.  For some that means investing in the stock market. For others it is buying more real estate. Rental demand is still very high, especially for single-family homes, and a new breed of rental management and investment company is making it much easier to become a landlord.

Of course, there is a sizable amount of equity being put towards material expenditures such as cars, boats, and other luxury items. This time around, however, more people are mindful of where the money will actually add value or help create more growth. The upcoming 1st and 2nd quarters of this new year will be a strong indicator of whether equity in homes will continue to be a driver of added investment in the overall economy. More to follow on this and if you want to get a quote on accessing your home/condo’s equity, please email me at or call at (415) 360-0050.

Arjun Dhingra