Homeowners Got $2T Richer During the First Three Months of 2021
Market Report Videos - By CNBC
Homeowners are getting richer and richer as prices keep soaring, and the numbers are staggering. Those with mortgages, ~62% of all properties, saw their equity increase 20% YoY in Q1, representing a collective cash gain of close to $2T. (CoreLogic).
The massive gain is thanks to soaring home prices, which were 11% higher YoY in March, the end of the quarter. Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic.
These gains have become an important financial tool and boosted consumer confidence in the U.S. market, especially for older homeowners and baby boomers.
The share of borrowers in a negative equity position, owing more on their mortgages than their homes are worth, consequently dropped.
From Q4 to Q1 2021, the total number of mortgaged homes in negative equity dropped 7% to 1.4 million homes or 2.6% of all mortgaged properties.
Home values are expected to cool off in coming months because buyers are already hitting affordability wall.
Home prices are not expected to crash, unlike the last time home prices crashed, today’s mortgage underwriting is far more stringent.
