Rising home prices have meant most homeowners have seen significant gains in equity over the past year. That may prove to be a critical buffer to help owners hit hard by economic uncertainty during the pandemic avoid foreclosure.
In the second quarter, the average annual equity gain for borrowers was $51,550, five times that of a year ago, according to CoreLogic’s latest Equity Report.
“While the coronavirus pandemic created economic uncertainty for many, the continued acceleration in home prices over the last year has meant existing homeowners saw a notable increase in home equity,” Molly Boesel, chief economist at CoreLogic, says in a column at the real estate research firm’s website. “The accumulation of equity has become critically important to homeowners deciding on their post-forbearance options.”
During the Great Recession, borrowers underwater on their mortgages were facing plummeting home prices. Nowadays, however, most borrowers who are behind on their mortgage payments can tap into their equity and sell their home rather than lose it to foreclosure, Boesel says.
That said, some homeowners may still be at risk. The states with high negative equity have seen the lowest home price appreciation compared with the national average. The following are the places most at risk for foreclosure and distressed sales, according to CoreLogic’s analysis.