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Rising home prices driving highest equity gains since 2014

Surging home prices have created the largest gains in home equity in six years. Paired with mortgage rates near record lows, price appreciation is pulling many borrowers out of negative equity since Q3 of 2019.

A continued surge in home prices nationwide is contributing to some of the largest gains in home equity not seen in six years, since 2014.

Price appreciation has also pulled 370,000 borrowers out of negative equity since the third quarter of 2019, according to Zillow, and contributed to a steadily rising confidence amongst would-be home sellers.

With mortgage rates near record lows as well as an easing on borrowing conditions, buying remains strong.

The housing market’s enduring strength has resulted in trillions of dollars in equity, according to Zillow. From Sept. 2019 through Sept. 2020, homeowners with mortgages collectively gained $1 trillion in home equity, according to CoreLogic.

Nationally, about 1.6 million mortgages – around 3 percent of all loans – were in negative equity in Q3, owing more on their loan than the house is worth. This is down from 18.3 percent in Q3 of 2019.

With strong home value appreciation unlikely to weaken, these positive developments seem likely to continue. According to the report, if home prices increase another 5%, another 247,000 homes would emerge from negative equity.