IRVINE, Calif.–With home prices on a tear and setting records, homeowners are seeing another benefit—a huge increase in their home equity.
According to new data from CoreLogic, Americans’ home equity rose by nearly 20% in the first part of this year from last year. Homeowners with mortgages -- about 62% of properties -- saw an equity gain of nearly $2 trillion nationally from last year, which is an average gain of $33,400 per borrower, the company stated.
"Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic," said Frank Martell, president and CEO of CoreLogic. "These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market, especially for older homeowners and Baby Boomers who've experienced years of price appreciation.”
As CUToday.info has reported, across the US, home prices increased 11.4% this year through March, according to the national CoreLogic Home Price Index. That's led to an increase in the average amount of equity held by homeowners with a mortgage, said Frank Nothaft, chief economist for CoreLogic, which is now $216,000 over the life of their loan.
Fewer Distressed Sales
"This reduces the likelihood of large numbers of distressed sales from homeowners who emerge from forbearance later in the year," Nothaft said.
Analysts have noted the increase in equity is particularly important for the 2.12-million homeowners who fell behind on their mortgage and are still in forbearance programs with their lenders. Black Knight reported that while many have left such programs, approximately 4% of homeowners remain in a Coronavirus-related forbearance plan.
The number of homes that are "underwater" decreased by 24% from the beginning of 2020, according to the report.