IRVINE, Calif.–The pandemic has had more than just a silver lining for American homeowners: it’s gold, as they are approximately $1 trillion richer as a result.
As prices rise over the past year, homeowners with mortgages, representing about 63% of all properties, have seen their equity increase by 10.8%, according to CoreLogic. That equates to a collective $1 trillion in gained equity, or an average $17,000 per homeowner, the largest equity gain in more than six years,
In Washington state, homeowners banked an average of $35,800. In California they gained $33,800 and in Massachusetts an average of $31,200, according to CoreLogic. Homeowners in North Dakota, however, have seen the lowest annual equity gain of just $5,400.
"Over the past year, strong home price growth has created a record level of home equity for homeowners," said Frank Nothaft, chief economist for CoreLogic. "The average family with a home mortgage loan had $194,000 in home equity in the third quarter. This provides an important buffer to protect families if they experience financial difficulties."
Coming to a Close?
Some analysts, however, are forecasting the run on housing may actually be running out of steam.
"With pent-up demand from the spring now largely expended, mortgage interest rates are unlikely to fall further, inventory at record lows and early signs that the exodus from cities is slowing, home sales will edge back further over 2021," wrote Matthew Pointon, property economist with Capital Economics, according to CNBC. "That, alongside tight credit conditions, suggest the current boom in house prices will prove short-lived."
But the report added, “While home price gains may ease, prices are unlikely to weaken dramatically, simply because of the supply and demand imbalance. That will continue to help those borrowers who have the least amount of equity.”
In the meantime, the share of borrowers in a negative equity position, owing more on their mortgages than their homes are worth, is down over 18% from a year ago. There are now just 3%, 1.6 million mortgaged properties, in a negative equity position, CNBC reported.