The coronavirus pandemic has ravaged the economy, but U.S. homeowners with mortgages have seen their equity increase by $17,000 on average since the third quarter of 2019, or 10.8% year over year, according to a new report by CoreLogic.
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Low mortgage rates have driven demand for the low supply of houses, sending prices soaring throughout the summer and fall.
“The housing market has remained a strong pillar in an otherwise tumultuous economic year,” said Frank Martell, president and CEO of CoreLogic, a property insights firm.
“A sharp rise in demand, spurred by record-low interest rates, continues to bolster homeowner equity. And with many people now spending more time than ever before at home, some homeowners have tapped into their strengthening equity to fund renovations.”
The average home with a mortgage, which is about 63% of all properties, gained $17,000 in equity during the past year, but that increase differed from region to region in the United States.
The West had the biggest gains, with the average Washington homeowner gaining $36,000 in equity and the average California homeowner gained $34,000 in equity.
The Midwest had relatively lower gains. Illinois homeowners gained just $6,000 in equity and Iowa homeowners gaining just $7,000.
Homeowners in North Dakota had the lowest increase in equity of about $5,000.
Negative equity, when a homeowner owes more on their mortgage than their house is worth, also decreased since last year, falling by 18.3% year over year from roughly 2 million homes to about 1.6 million homes.
In the third quarter of 2020, the total number of mortgaged residential properties with negative equity decreased by 6.9% from the second quarter of 2020 to 1.6 million homes, or 3% of all mortgaged properties. On a year-over-year basis, negative equity fell by 18.3% from 2 million homes, or 3.7% of all mortgaged properties, in the third quarter of 2019.
The housing market is hotter in areas that haven't been hit as hard with coronavirus infections. Redfin, an online real estate company, found in an analysis this week that pending home sales increased 54.1% year over year in counties with low coronavirus infection rates, which is notably more than the 45.1% growth in counties with high coronavirus infection rates.
“Many of the counties with fewer coronavirus cases per capita happen to be the same suburban counties that people are moving to during the pandemic," said Redfin senior economist Reginald Edwards.
"Folks are migrating to these places because the crowded, expensive cities they used to live in no longer have as much to offer, with restaurants, entertainment and workplaces shut down. The counties with fewer cases per capita are also seeing higher growth in home listings, which is allowing home sales to flourish.”