Homeowners are getting wealthier and wealthier, according to CoreLogic’s latest report.
Homeowners with mortgages saw their equity increase by $1.9 trillion – or about 20% – in the first quarter of 2021, according to CoreLogic Homeowner Equity Report. Each borrower gained about $33,400, which is the largest average equity gain in at least a decade, according to the report. (Home Sales Rise And Real Estate Prices ‘Soar’ Despite Coronavirus Induced Recession)
Homes in San Bernadino, California. Photo by David McNew. Getty.
“In contrast to the 2008 financial crisis, when many borrowers were underwater, borrowers today who are behind on mortgage payments can tap into their equity and sell their home rather than lose it through foreclosure,” the report states.
National negative equity was 2.6% this quarter, the lowest in more than 10 years, according to CoreLogic. CoreLogic started tracking this number in 2009. States with high negative equity shares face an increased risk of foreclosures and distressed sales. The states with the largest negative equity shares this quarter include Louisiana, Iowa, Illinois, Oklahoma and Connecticut, respectively. Among the 10 largest metropolitan areas, Chicago had the highest negative equity share at 6.1%.
But while this market may be a boon for those who already have a house, it has been “beyond crazy” for those looking to get one.
George Ratiu, senior economist for Realtor.com, told CBS News the pandemic real estate market is “beyond crazy and frustrating” for buyers. “I wouldn’t call this a normal market.” And soaring home prices and short supply are likely to continue, according to Bloomberg News.
Edward Pinto, an American Enterprise Institute resident fellow, told Bloomberg News he predicts prices will rise 18% annually through July and that in 2022 prices will rise about 10%. High lumber prices alone have added about $36,000 to the price of a new single-family home home, according to the National Association of Home Builders.