Home Equity Growth Up Nearly 20%

Is now a good time to sell?

“Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic,” says Frank Martell, president and CEO of CoreLogic in an article at cnn.com.   

“These gains have become and 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.”

Home equity—a home’s value minus the mortgage owed—is up almost 20% in the first part of 2021 compared to the previous year.  This equates to a financial gain of about $33,400 in equity for the average homeowner, according to CoreLogic’s HomeownerEquity Insights Report. 

Sixty-two percent of United States homeowners hold mortgages; their total increase in equity amounts to almost $1.9 trillion.

Homeowners with negative equity, or “underwater mortgages”, are down 7% in 2021’s first quarter from 2020’s fourth quarter, equal to 2.6% of all mortgaged properties or 1.4 million homes.  A year-over-year examination of these figures shows negative equity decreased 24%, or 3.4% of all mortgaged properties.

This increase in equity is dictated by home prices up considerably of late; in fact, CoreLogic reports “Double-digit home price growth in the past year…bolstered home equity to a record amount.  The national CoreLogic Home Price Index recorded an 11.4% rise in the year through March 2021…”

This growth in equity is important for homeowners considering post-forbearance housing choices: mortgage holders behind on today’s payments can sell their homes, using their increased equity to avoid foreclosure.

Further good news is that, according to RealtorMagazine, by 2021’s second quarter, “Thirty-four percent of residential properties in the U.S. with a mortgage were considered “equity rich,”—a rising statistic. 

Many factors contribute to the big decision for consumers to list their homes for sale; home equity is one of them.  In the current market, equity runs high. 

How might you want to take advantage of this “equity rich” market?

Whether homeowners hope to capitalize on their increased equity to avoid foreclosure; to “cash out” via a home sale and use proceeds to fund other interests; or to leverage this year’s newfound wealth in purchase of a larger property, many U.S. consumers will find that the increased value in their homes means this could be a good time to sell.