Image by pixabay.com Nattanan Kanchanaprat

I read an online article today at Bloomberg that said at the end of 2020, more than 30% of U.S. homeowners were considered equity-rich — meaning their property was worth twice as much as the underlying mortgage.

Helped by low interest rates, the count of equity-rich properties in the fourth quarter of last year rose to 17.8 million of the 59 million mortgaged homes in the U.S., according to the ATTOM Data Solutions fourth-quarter 2020 Report released Thursday. That’s up from 26.7% in the fourth quarter of 2019.

“The housing market kept booming despite damage caused by the virus pandemic to the broader economy,” said Todd Teta, ATTOM’s chief product officer. “Homeowners are sitting pretty on a growing reserve of personal wealth.”

Nationally, the S&P CoreLogic Case-Shiller index gained 9.5% in November, the most since 2014.

The rise in values is also helping to reduce the number of seriously underwater properties. These types of homes — defined as having a combined balance of loans secured by the property at least 25% more than its market value — have fallen by a full percentage point over the past year. They now account for 5.4% of mortgaged U.S. properties.

Home Wealth

Among 107 metropolitan statistical areas with a population greater than 500,000, the 10 with the highest shares of equity-rich properties in the fourth quarter were in the West.

My personal opinion is that homeownership builds wealth over time.  There are many investors and pretend HGTV flippers in our market, but the long-term view of owning a home is how you win.  I have owned my current home for 18+ years and it has close to tripled in value, but true value is owning (for me) is community, raising my family, memories of holidays and having neighbors that are like brothers and sisters to me.

The housing market will ebb and flow, but the long-term prospect of higher prices and a nice nest egg is enough motivation to purchase a home.

Sources: By Alexandre Tanzi, Bloomberg
Curt Tiedeman EducateHomeBuyers.org