Historic increases in home values added tens of thousands of dollars to the average homeowners’ equity. CNBC reports equity advanced 20% during the first quarter of 2021 compared to one year prior. That increase equates to an average gain of $33,400 for homeowners with a mortgage and a collective gain of nearly $2 trillion. Homeowners with mortgages make up 62% of all properties. Home prices increased 11% in March alone, marking the sharpest increase since 2006. They went on to jump 13% more in April, bringing home values up even further.
High demand for homes spurred by the coronavirus pandemic amid an already low supply caused bidding wars in markets across the nation. Record-low mortgage rates for much of last year only added to the buying frenzy and helped fuel the price gains.
“Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic,” said Frank Martell, president and CEO of CoreLogic. “These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market, especially for older homeowners and baby boomers who’ve experienced years of price appreciation.”
As of June 1, there were still just over 2 million homeowners in Covid-related mortgage bailout programs, according to the Black Knight real estate data company. As these plans begin to expire, having home equity will help those in trouble. They can still sell and get out with a potential profit if they have to.