CoreLogic's Homeowner Equity Report for the third quarter of 2021 showed U.S. homeowners with mortgages (which account for roughly 63% of all properties) saw their equity increase by 31.1% year-over-year, an average gain of $56,700 per borrower, since the third quarter of 2020.
This summer, home price growth reached the highest level in more than 45 years, pushing gains to another record high and allowing 70,000 properties to regain equity in the third quarter of 2021, according to the report. The company stated that these gains helped 1.2 million borrowers who reached the end of forbearance in September, combat foreclosure.
“Not only have equity gains helped homeowners more seamlessly transition out of forbearance and avoid a distressed sale, but they’ve also enabled many to continue building their wealth,” said Frank Martell, president and CEO of CoreLogic. “This financial reserve will be especially helpful for homeowners looking to fund renovation projects.”
“Home price growth is the principal driver of home equity creation,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The CoreLogic Home Price Index reported home prices were up 17.7% for the past 12 months ending September, spurring the record gains in home equity wealth.”
“Because home equity is affected by home price changes, borrowers with equity positions near (+/- 5%) the negative equity cutoff are most likely to move out of or into negative equity as prices change, respectively,” according to the report. CoreLogic states that if home prices increase by 5%, 145,000 homes would regain equity; if home prices decline by 5%, 191,000 would fall underwater.
