Americans gain $1 trillion in home equity in 3Q

In the third quarter, Americans collectively added over $1 trillion in home equity on a year-over-year basis and the average gain per owner was the highest in six years, CoreLogic said.

"The housing market has remained a strong pillar in an otherwise tumultuous economic year," Frank Martell, president and CEO of CoreLogic, said in a press release. "A sharp rise in demand, spurred by record-low interest rates, continues to bolster homeowner equity."

Homeowners with a mortgage — about 63% of all properties — found their properties added 10.8% in value when compared with the third quarter of 2019.

They aren't sitting on those gains. "With many people now spending more time than ever before at home, some homeowners have tapped into their strengthening equity to fund renovations," Martell said.

Homeowners saw an average gain of $17,000, which was the highest since the first quarter of 2014, CoreLogic noted.

By state, the highest average gains were in Washington, up $35,800; California, up $33,800; and Massachusetts, up $31,200. Meanwhile, North Dakota, which was hit hard by the pandemic, experienced the lowest annual equity gain, at just $5,400.

"Over the past year, strong home price growth has created a record level of home equity for homeowners," said Frank Nothaft, chief economist for CoreLogic. "The average family with a mortgage loan had $194,000 in equity in the third quarter. This provides an important buffer to protect families if they experience financial difficulties."

Equity gains should continue in the near term with strong home purchase demand and low inventory continuing to push prices up. But over the next 12 months, home price growth should slow as new home construction and more existing homes coming on the market will ease supply pressures, CoreLogic previously said.

Rising equity also meant that fewer homeowners were underwater on their mortgage.

At the end of the third quarter, 1.6 million properties had more money owed on the mortgage than they were worth. That was down by 6.9% from 1.7 million in the second quarter and by 18.3% or nearly 2 million in third quarter of 2019.

The national aggregate value of properties in negative equity was approximately $283.3 billion at the end of the third quarter. This is down 0.8% from $285.5 billion in the second quarter and 7% from $304.7 billion in the third quarter of 2019.

Louisiana had the highest percentage of mortgaged properties in negative equity in the third quarter at 9.7%, followed by Illinois at 6.5% and Connecticut at 6.4%.