The Wealth Effect
Current homeowners are seeing the value of their property steadily rise, and homebuyers currently searching for a new St. Helena residence can reap the benefits of rising home prices in the future. Often, rising home prices actually spark a demand in the market, spurring would-be home buyers to purchase a house before the prices get any higher.
In fact, rising home prices are usually an indicator of further economic growth within a community. Known as the wealth effect, rising housing prices result in an increase in wealth for current homeowners, which can spur additional spending within the local economy. Rising home prices also give current homeowners an increased equity withdrawal, allowing banks to grant them larger loans for home improvement projects or other major household purchases.
Rising housing prices can also positively impact the lending practices of area banks. When home prices rise, the banks also realize an increase in their assets, giving them the confidence to increase lending opportunities to area residents.