Home Equity Reaches Record Highs
- The number of mortgages in negative equity fell by 18.3% year over year in Q3 2020
- Average equity gain of $17,000 per homeowner in Q3 2020 was the highest in over six years
CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released the Home Equity Report for the third quarter of 2020. The report shows U.S. homeowners with mortgages (which account for roughly 63% of all properties) have seen equity increase by 10.8% year over year, representing a collective equity gain of $1 trillion, and an average gain of $17,000 per homeowner, since the third quarter of 2019. This marks the largest average equity gain since the first quarter of 2014.
Despite the economic impact of the pandemic, home prices soared throughout the summer and fall. Appreciation reached its highest level since 2014 in the third quarter of 2020 as prospective homebuyers continued to compete for the low supply of homes on the market, pushing home equity to record levels. Equity gains are likely to persist over the next several months as strong home-purchase demand is expected to remain high and continue pushing prices up. However, 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. This could moderate the pace of both home price growth and equity gains.
“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.”
“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...”
