Home values have soared in the last year. In many markets, home prices have risen by double digits. The widely followed real estate price monthly S&P Case-Shiller Index showed home prices jumped over 15% in several large markets in March. The improvement is driven by people leaving the largest cities, particularly on the East and West Coasts because of the COVID-19 pandemic, solid middle and upper-class incomes, and low mortgage rates. The value of home equity in most states also moved up by well over $30,000 in the first quarter of 2021 compared with the same period a year ago. Nationwide, home equity rose 19.6% to $1.9 trillion. according to CoreLogic.
CoreLogic’s researchers commented: “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 boost in home equity.” It pointed out how large a contrast this is to the residential real estate collapse of 2007 and 2008 at the peak of The Great Recession. They added: “In the first quarter of 2021, the average homeowner gained approximately $33,400 in equity during the past year.”
The state where home equity rose the most was Idaho at $70,900. One theory about the increase is that many people from the large cities in California are moving there. However. two West Coast states ranked next. California’s figure was $69,600, and Washington’s number was $65,800. Three other states in the West did extremely well. Equity value rose $51,000 in Arizona in the first quarter compared to last year. The number rose $53,000 in Utah, and $50,000 in Montana.
The state that did the worst was North Dakota where home equity rose only $8,400. Other states near the bottom of the list were Iowa at $11,000 and Oklahoma at $18,000. It is not clear why these states were at the bottom of the list.
It remains to be seen what will happen to home equity for the balance of the year. So far, much of the published research on this subject indicates this trend will continue.