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Homeowner Equity Surged in Q2
Tuesday, September 22, 2020
There was another big surge in the amount
of equity on the balance sheets of American homeowners in the second quarter of
this year. CoreLogic reports that the 4.3 percent gain in home prices over the
past year sent home equity shooting up by 6.6 percent. The report shows U.S. homeowners
with mortgages (which account for roughly 63 percent of all properties) saw an
average gain in equity from the second quarter of 2019 of $9,800. The collective
nationwide increase was $620 billion. This is especially important at this
point, as equity may provide some insulation for homeowners during the pandemic.
During the housing boom millions of buyers used low down payment mortgages and
there was an epidemic of cash-out refinances, leaving many homeowners with
little equity. When prices began to fall, millions fell quickly into negative
equity, owing more on their mortgages than their homes are worth. This left them
with little flexibility to refinance or sell their homes to get out of
financial difficulty.
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