According to the latest numbers from CoreLogic released on Thursday, the average American homeowner with a mortgage gained 19.6 percent in equity in the first quarter of 2021, which amounts to a $33,400 — the highest annual gain per borrower in at least a decade.
Skyrocketing home values have continued in spite of the pandemic in large part due to the severe dearth of inventory observed throughout the country. While this risks widening inequality and makes the leap from renting to owning very difficult, those who own a home are currently seeing monumental gains in equity.
“Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic,” Frank Martell, president and CEO of CoreLogic, said in a press statement. “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.”
The number of homes that are underwater also dropped by 24 percent year over year; currently only 1.4 million, or 7 percent of mortgaged homes, are worth less than the homeowners owe the bank.
CoreLogic found that 74 percent of current homeowners with mortgages are not worried about owing more on their home than it is worth in the next five years. Some of the biggest gains in equity took place on the West Coast in states like California, Washington, Idaho and Utah.
“Double-digit home price growth in the past year has bolstered home equity to a record amount,” Dr. Frank Nothaft, chief economist for CoreLogic, said in a press statement. “The national CoreLogic Home Price Index recorded an 11.4 percent rise in the year through March 2021, leading to a $216,000 increase in the average amount of equity held by homeowners with a mortgage. This reduces the likelihood for a large numbers of distressed sales of homeowners to emerge from forbearance later in the year.”