The pandemic brought historically low inventory and sky-high home prices, but it also brought good news for homeowners, making them equity rich, as many owe far less than what their homes are worth.
A recent report from ATTOM Data Solutions found 39.5% of homes with mortgages in the U.S. were equity rich in the third quarter. That’s up from 28.3% of homes last year.
Today’s homeowners are not only in a position where they could sell their homes for twice what they owe, many are putting down more money, helping them build equity from the get-go.
“There is no doubt that homeowners continue benefiting big-time from the relentless home price increases we are seeing around the country,” Todd Teta, chief product officer of ATTOM said in a press release.
Boston led the Northeast, with 48.9% of mortgaged properties categorized as equity rich in the third quarter. The Bay State also had two counties with the highest share of equity-rich properties: Nantucket County at 76.6% and Dukes County on Martha’s Vineyard, at 74.3%.
According to the report, equity-rich levels increased from the second quarter in 46 states, including Washington, D.C., while “seriously underwater” percentages dropped in 39 states. Only 3.4% of mortgaged homes were considered seriously underwater, down from 4.1% in the second quarter and 6% from a year ago.
Despite signs of the market slowing down, home prices continue to rise, and that’s good news for homeowners.
“Homeowners across most of the United States could sit back with a smile yet again in the third quarter and watch their balance sheets grow, as soaring home prices pushed their equity levels ever higher,” Teta said. “Amid the best gains in two years, nearly four of every 10 owners found themselves in equity-rich territory.”
In a year that was financially devastating for many Americans, some good news for most homeowners is the dramatic gain in home equity over the last twelve months. Last week, CoreLogic released its 2020 3rd Quarter Homeowner Equity Insights report, which reveals four major findings:
Homeowners with mortgages have seen their equity increase by a total of $1 trillion since the third quarter of 2019.
Since 2011, the net home equity holdings of Americans rose by $1.7 trillion. But $500 billion of that growth occurred in just the past three months alone.
To give you an idea of how important that is to the economy, let’s say that various homeowners borrow 10 percent against that last $500 billion over the course of the next year. That’s $50 billion pumpings through the economy — and much of it through the home-remodeling industry in particular — that wasn’t there before. In turn, that means more architects, designers, contractors, carpenters, electricians, etc. working.
The Globe recently did a big story on how the remodeling industry is recovering fast in Greater Boston. Not all of it is driven by borrowing. Still, a healthy housing market, not surprisingly, leads to more confident homeowners willing to re-invest in homes