Are you one of the many homeowners that feared the COVID-19 health pandemic would cause depreciating effects to the housing market? If so, you are not alone. Millions of Americans feared the collapse of our economic market would also reflect within our real estate market. Fortunately, there have been some bright sparks in the housing market during these unchartered and challenging times.
One of the highlights of the 2020 real estate market has been the nationwide increase in home equity. The 2020 stock market crash that began on Monday, March 9th resulted in an overall 7.79% decline, marking Dow’s worst short-term point drop in U.S. market history. Meanwhile, the real estate market had a different effect. According to the Homeowner Equity Insights Report from CoreLogic, there was a nationwide 6.5% year-over-year first quarter equity increase. According to the report, approximately 63% of homes witnessed an overall equity increase of $590 billion since the first quarter of 2019. This means that, “in the first quarter of 2020, the average homeowner gained roughly $9,600.00 in equity over the past year.”
This opens a variety of opportunities for both home sellers and homebuyers. For home sellers, having equity to be able to re-invest in your next home is a huge motivating factor, and there is no better time to leverage your home equity than now – when buyer demand is high. For home buyers, knowing that the year-over-year increase in home values still took place in the midst of the current pandemic and economic downfall further reinforces the fact that real estate is by far one of the safest, worthwhile investment vehicles.
Further touching upon the increases in home equity, CoreLogic President & CEO, Frank Martell, states based on the 2020 real estate market analysis, the long-term outlook will differ greatly from that of the previous recession. This is because the previous recession created a large increase in negative equity due to an oversaturated housing market, risky mortgages, and the collapse of home prices. While it is true that many homeowners will experience a recession within their lifetime, it is important to remember that each one is different. While the last recession highly affected the housing market, this one did not. Today’s housing market currently consists of both low delinquency and vacancy rates, as well as a large home equity cushion.