Homeowners earned $ 2.9 trillion in equity
CoreLogic Homeowners’ Net Worth Report for the second quarter of 2021 found that US homeowners with mortgages (who account for about 63% of all properties) saw their equity increase 29.3% year over year, a collective equity gain of more than 2, $ 9 trillion and an average gain of $ 51,500 per borrower, since the second quarter of 2020.
In June 2021, consumer confidence had reached its highest level since the start of the pandemic. This positive sentiment was echoed by current mortgage holders in a recent CoreLogic consumer survey, which found that 59% of respondents feel extremely confident in their ability to keep their mortgage payments up to date throughout the year. future.
Most borrowers have been able to stay up to date on their mortgage payments, thanks to ongoing government arrangements, increased vaccine availability and record gains in homeowners’ equity. CoreLogic has found that the majority of borrowers who are behind on their payments have a large home equity cushion that will help them avoid foreclosure.
“Growing homeowners’ equity provides a solid financial cushion for tens of millions of Americans. For those most affected by the pandemic, equity gains will help play a critical role in avoiding foreclosure, ”said Franck Martell, President and CEO of CoreLogic. “Based on the expected increases in economic activity and home values over the next year, we expect to see further equity gains and a corresponding decline in negative equity, forbearance rates. and locking. “
Negative equity, underwater mortgages or reverse mortgages in the second quarter of 2021 were as follows:
- Quarterly change: Between the first quarter of 2021 and the second quarter of 2021, the total number of mortgaged homes with negative equity declined 12% to 1.2 million homes, or 2.3% of all mortgaged properties.
- Annual change: In the second quarter of 2020, 1.8 million homes, or 3.3% of all mortgaged properties, were in negative equity. This number fell by 30%, or 520,000 properties, in the second quarter of 2021.
- National overall value: The national aggregate value of negative equity was about $ 268 billion at the end of the second quarter of 2021. This is a decline of about $ 5.2 billion, or 1.9%, d ‘quarter-over-quarter, compared to $ 273.2 billion in the first quarter of 2021, and down year-over-year to about $ 18.9 billion, or 6.6%, compared to $ 286.8 billion in the second quarter of 2020.
“The wealth of home equity is at an all time high and will boost economic activity over the coming year,” said Dr. Frank Nothaft, Chief Economist for CoreLogic. “Higher wealth drives additional consumer spending and also supports room additions and other home investments, adding to overall economic activity.”
Because home equity is affected by changes in home prices, borrowers with equity positions close (+/- 5%) to the negative equity threshold are the most likely to exit or switch. to negative net worth when prices change, respectively. Looking at the mortgage book for the second quarter of 2021, if house prices rose 5%, 160,000 homes would regain their equity; if house prices fell 5%, 211,000 would fall under water.