According to CoreLogic, home equity — the value of your home and how much you owe on your mortgage — grew by about 20% in the first half of this year from last year. Homeowners with mortgages — about 62% of assets — saw equity gains of nearly $2 trillion nationally from last year, which averages out to an average profit of $33,400 per borrower.
“Homeowner equity has more than doubled over the past decade and has become a vital buffer to meet the challenges of the pandemic,” said Frank Martel, president and CEO of CoreLogic.
“These benefits have become an important financial tool and have fueled consumer confidence in the US housing market, especially for older homeowners and baby boomers who have experienced years of price appreciation,” he said.
Rising demand for a record-short supply of homes has driven home prices up sharply over the past year, pushing home equity higher.
Across the US, home prices rose 11.4% during March of this year, according to the National CoreLogic Home Price Index. This has increased the average amount of equity held by homeowners with mortgages, which is now $216,000 over the life of their loans, said CoreLogic’s chief economist Frank Nothft.
“This reduces the likelihood of a large number of distress sales from homeowners who emerge out of tolerance later in the year,” he said.
But the strong housing market means that even homeowners who can’t hold onto their mortgage after foreclosure will be able to easily sell their home instead of losing it to foreclosure.
According to the report, the number of “underwater” homes – those with outstanding mortgages that exceed the value of the home – decreased by 24% since the beginning of 2020.