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In the third quarter of 2021 homeowners with mortgages, have collectively made gains of $3.2 trillion noted the analysts at CoreLogic.
The Homeowner Equity Report from CoreLogic shows an increase of 31.1% year-over-year (YOY). Since Q3 of last year, the average gain is around $56,700 per homeowner.
As analysts note that these gains are important for home renovation projects. As homeowners take advantage of home equity loans and increase the value of their homes by making improvements to them.
Analysts noted that mass foreclosures could be avoided because of the increase in equity.
According to Frank Nothaft, chief economist at CoreLogic, home price growth is the main reason for home equity creation.
According to the report between September 2020 and September 2021, the price of homes has gone up by 17.7%.
Even though home price growth has not been favorable for first-time homebuyers, or buyers having budget constraints, it has created wealth stability for existing homeowners said deputy chief economist at CoreLogic, Selma Hepp.
Analysts are warning of a potential drop in the price of home equities in 2022. This could be bad news for borrowers who are at +/-5% equity at the moment and very close to a negative equity cut-off.
Reference Source: Fortunly
