Home prices are up sharply, and the average annual homeowner equity gains in the fourth quarter of 2020 reached the highest level since 2013, CoreLogic reports in its latest Home Equity Report. These gains among homeowners have helped to offset some of the financial difficulties from the pandemic.
“This growing bank of personal wealth that homeownership affords was noticed by many but in particular for first-time buyers who want a piece of the cake,” says Frank Martell, president and CEO of CoreLogic. “As a result, we may see more of those currently renting start to enter the market in the near future.”
In the fourth quarter of 2020, the average homeowner gained about $26,300 in equity during the past year. California, Idaho, and Washington saw the largest average equity gains at $54,500, $48,500, and $47,200 respectively.
Meanwhile, properties in a negative equity position—reflecting borrowers who owe more on their mortgages than their homes are currently worth—dropped to 2.8% of all properties with a mortgage in the fourth quarter of 2020, a 21% decrease compared to the previous quarter.
The increase in equity is enabling more families “to finance home remodeling, such as adding an office or study, further contributing to last year’s record level in home improvement spending,” says Frank Nothaft, chief economist at CoreLogic.
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