Homeowners are seeing serious gains in home equity despite the COVID-19 pandemic. CoreLogic's Home Equity Report revealed that home prices were up 4.3% in the past year with additional gains predicted over the next 12 months. According to the report, equity for homeowners with mortgages rose 6.6% over the past year, a collective equity gain of $620 billion and an average of $9,800 per homeowner as of the second quarter of 2020.
Properties with negative equity fell by 15% in the second quarter of 2020, according to the report. The increase was driven by strong home-purchase activity, spurred on by low mortgages rates, as well as low for-sale inventory which drove home prices up.
While numbers remain strong for homeowners and sellers, CoreLogic is predicting a slow in-home price growth over the next 12 months as unemployment is expected to rise for the remainder of the year.
"The CoreLogic Home Price Index registered a 4.3% annual rise in prices through June, which supported an increase in home equity," said Frank Nothaft, chief economist for CoreLogic. "In our latest forecast, national home price growth will slow to 0.6% in July 2021 with prices declining in 11 states. Thus, home equity gains will be negligible next year, with equity loss expected in several markets."
"Homeowners’ balance sheets continue to be bolstered by home price appreciation, which in turn mitigated foreclosure pressures," said Frank Martell, president and CEO of CoreLogic. "Although the exact contours of the economic recovery remain uncertain, we expect current equity gains, fueled by strong demand for available homes, will continue to support homeowners in the near term."
