Homeowners across the country gained an average of $9,800 in home equity over the past year, according to a new CoreLogic report released Monday.
Adding up to a collective $620 billion, homeowners’ equity rose by 6.6 percent compared to the same period a year earlier. Such a rise is propelled by increasing home prices, which rose 4.3 percent year over year despite the coronavirus pandemic and ensuing hits to the job market and economy.
In between the first and second quarters of 2020, the number of mortgaged homes in negative equity fell by 15 percent to 1.7 million homes. Year over year, the number of mortgaged homes in negative equity fell by 15 percent. At this time last year, that number of homes in negative equity stood at 2.1 million homes.
CoreLogic
But while the current numbers paint a positive market, the pandemic is only beginning to show its effect on the housing market. According to CoreLogic, home price growth is expected to cool significantly over the next year as relief programs come to an end and months of widespread unemployment start to trickle into the housing market.
“Homeowners’ balance sheets continue to be bolstered by home price appreciation, which in turn mitigated foreclosure pressures,” Frank Martell, president and CEO of CoreLogic, said in a statement. “Although the exact contours of the economic recovery remain uncertain, we expect current equity gains, fueled by strong demand for available homes, will continue to support homeowners in the near term.”
CoreLogic
Currently, CoreLogic has observed significant differences between equity gains in different parts of the country. Montana and Idaho, for example, saw average gains of $28,900 and $21,200, respectively. New York, which was one of the epicenters of the outbreak, saw an equity gain of only $4,400.
Slowing home price growth and damage to the economy caused by closures will begin to show in homeowners’ equity in the coming months, according to the CoreLogic report.
“In our latest forecast, national home price growth will slow to 0.6 percent in July 2021 with prices declining in 11 states,” Dr. Frank Nothaft, chief economist for CoreLogic, said in a press statement. “Thus, home equity gains will be negligible next year, with equity loss expected in several markets.”