Homeowners Pile Up Equity Wealth as Prices Rise

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That’s how many mortgaged homes nationally are now equity rich—up from just over 26% before the pandemic—thanks to the housing boom.

Equity-rich homes, meaning homes with an estimated market value of at least twice what is owed in mortgage balances, have become steadily more common as real estate values have soared in the pandemic, according to new real estate data from ATTOM Data. Not only that, but the share of seriously underwater mortgages (where the owner owes at least 25% more than their home is worth) has been almost cut in half, plunging from 6.6% before the pandemic to 3.4% in the third quarter of this year. 

The two trends underline the vastly different trajectories the pandemic has created for different groups. While homeowners have seen their wealth increase as low mortgage rates and a demand for work-from-home accommodations drove home prices up, the same phenomenon has hurt prospects for many potential buyers, particularly first-time buyers. And that has, in turn, helped fuel a surge in rents.

While homeowners as a whole have benefitted from price increases, those in some areas are vastly better off than others. Some 65% of homes in Idaho are equity-rich, compared to 19.8% in Louisiana, for example.