Due mainly to rising home prices – and in spite of the COVID-19 crisis – U.S. homeowners collectively gained more than $620 billion in home equity in the second quarter, CoreLogic’s Home Equity Report shows.
That’s an average gain of $9,800 per homeowner.
Driving the increase was rising home prices, which were up 4.3% year-over-year as of the end of the second quarter.
Overall, U.S. homeowners with mortgages saw their equity increase 6.6% compared with the second quarter of 2019, according to Black Knight’s data.
The number of mortgaged properties with negative equity decreased by 15% in the second quarter – to 1.7 million or 2%.
CoreLogic predicts home price growth will slow over the next 12 months and mortgage delinquencies will continue to rise.
These factors combined could lead to an increase of distressed-sale inventory, which could put downward pressure on home prices and negatively impact home equity.
“The CoreLogic Home Price Index registered a 4.3% annual rise in prices through June, which supported an increase in home equity,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “In our latest forecast, national home price growth will slow to 0.6 percent 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.”