Published on:
Homeowners with mortgages saw an average equity gain of $17,000 for the third quarter of 2020 compared to the same period a year ago. Owners in Washington state enjoyed more than double the U.S. amount with an average gain of $35,800 according to the CoreLogic® Home Equity Report.
CoreLogic reported the year over year (YOY) increase equaled 10.8% for homeowners with mortgages, a group that accounts for roughly 63% of all properties. The collective equity gain totaled $1 trillion since the third quarter of 2019 and marks the largest average equity gain since the first quarter of 2014.
“Over the past year, strong home price growth has created a record level of home equity for homeowners,” said Dr. 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 and is one reason for the generational low in foreclosure rates reported in September.”
Home equity gains are likely to continue over the next several months, fueled by strong purchase demand. Prices are also expected to keep rising, although the CoreLogic HPI Forecast shows home prices slowing over the next 12 months as new home construction and more existing for-sale homes ease supply pressures. CoreLogic believes this easing could moderate the pace of both home price growth and equity gains.
Also reported was a decrease in the total number of mortgaged homes in negative equity. From 2Q2020 to 3Q2020 that number decreased by 6.9% to 1.6 million homes or 3% of all mortgaged properties. A comparison of the third quarters of 2019 and 2020 showed a drop of 18.3%, or 370,000 properties in negative equity. For the third quarter of 2020 some 1.6 million mortgaged properties had negative equity.
“The housing market has remained a strong pillar in an otherwise tumultuous economic year,” said Frank Martell, president and CEO of CoreLogic. “A sharp rise in demand, spurred by record-low interest rates, continues to bolster homeowner equity. And with many people now spending more time than ever before at home, some homeowners have tapped into their strengthening equity to fund renovations.”