What does "equity" refer to in real estate?

Equity in real estate refers specifically to the difference between the market value of a property and the amount still owed on any mortgages or loans against that property. This concept is crucial for homeowners, as it directly relates to their ownership stake in their property. When the market value increases, or when the homeowner pays down their mortgage, their equity in the property grows.

For example, if a home is valued at $300,000 and the owner has an outstanding mortgage of $200,000, the equity would be $100,000. This equity can be crucial for various financial decisions, including obtaining loans against the property, selling the home, or refinancing.

The other choices describe different aspects of real estate but do not capture the essence of equity. The assessed value relates to taxation rather than ownership value, annual appreciation speaks to the increase in value over time rather than net ownership, and total repairs focus on property maintenance costs without considering the financial stake of the owner.