Smaller, affordable homes are in high demand these days. With a growing number of first-time home buyers entering the market and a lower-than-normal number of entry-level homes available for sale, there is a lot of competition for good, affordable homes among younger buyers. Because of this, owners of smaller homes are seeing big equity gains when compared to homeowners at the higher end of the market. Zillow senior economist, Aaron Terrazas, says there are a couple of reasons for this. “When the housing market crashed, owners of the least valuable homes were especially hard hit, and lost more home value than homeowners at the upper end of the market,” Terrazas says. “Since then, though, demand for less expensive, entry-level homes has built steadily, causing prices to grow rapidly. As a result, these homeowners have been able to build wealth at a faster pace than owners of more expensive homes.” In fact, according to recent research, people who own starter homes have seen their equity grow by nearly 45 percent over the past five years, while high-end homeowners saw gains closer to 27 percent.
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