Homeowners are unlocking record amounts of housing wealth as existing home values surge from strong pandemic-driven demand, record low housing supply, and historically low mortgage rates, CNBC reports. Annual home price gains averaged 15% in 2021, a substantial increase from 6% in 2020, and according to expert economists, the upward trend is continuing.
While buyers face limited affordability, waning supply, and intensifying competition, sellers are reaping the benefits and raking in an average $94,000 in profit, up 45% from 2020, and 71% higher than returns on pre-pandemic sales. Even those not listing their homes for sale gained significant equity. At the end of 2021, 42% of homeowners were considered equity-rich with mortgages half or less than half the value of their homes.
“Households that escaped job losses from the pandemic dove into the market, in large part as a response to the crisis,” said Todd Teta, chief product officer at ATTOM. “No doubt, there are warning signs that the surge could slow down this year. But 2021 will go down as one of the greatest years for sellers and one of the toughest for buyers.”
It was the highest profit level since 2008, which was the last housing boom and that boom was built on faulty mortgages and homeowners with little to no equity. That is not the case now.
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