WASHINGTON 鈥� If you鈥檙e a homeowner, rising home prices are a blessing and a curse. It鈥檚 nice to get more for the home you sell, but it may be moot if you can鈥檛 afford the newer, nicer, larger home you desire.
And, if you go home shopping today, you鈥檒l be paying a much higher interest rate than that nice low number you scored when you refinanced a year or so ago. So what鈥檚 the alternative?
鈥淭hey鈥檙e renovating,鈥� said CNBC Real Estate reporter Diana Olick. 鈥淭hey don鈥檛 want to move, so they put on another bathroom.鈥�
Olick said homeowners are paying for it with the rising value of that current home.
鈥淵ou鈥檙e seeing people get more equity than they ever thought,” she said.
And the vehicle to make it happen is a home equity line of credit.
鈥淵ou keep your first mortgage, and you take out that line of credit so you can pull cash out of the house,鈥� said Olick.
As little as a year ago, many homeowners were refinancing and taking cash out of their homes. But now, with higher interest rates, that鈥檚 not so practical.
鈥淵ou don鈥檛 want to do a re-fi and lose that low rate. Now, they have equity in the house to pull it out and add value to the home,” said Olick. “So it鈥檚 not just improving their lifestyle, but adding value to that property. They鈥檙e not taking the money out to buy cars and boats and go on vacations.鈥�
What kind of renovations are people doing?
鈥淜itchen and bath are the sellers. That鈥檚 what people see,” Olick said.
