Homes gained a value of $9,800 more during the second quarter. The change in home equity comes from the insatiable demand for homes and record low mortgage rates, according to CNBC. This comes out to a 6.6% annual increase in equity for homeowners with a mortgage. As home equity increased, more mortgaged properties were taken out of a negative equity position, where the mortgage is larger than the home’s value.The number of properties with negative equity dropped by 15% annually. This is especially helpful during this time of economic distress where many homeowners fear foreclosure is in their future.
“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.”
So how long can this last? So far real estate agents report no slowdown in demand, even going into the traditionally slower season of the year for housing.
As winter approaches, and reports of rising Covid-19 cases in certain states emerge, more people may be looking to upgrade their living situations, either moving out of urban areas or just into larger homes. As long as demand is high and supply is low, home prices will continue to gain. Some, however, argue there is a limit, especially if unemployment remains high.