Despite the coronavirus pandemic roiling the economy for more than a year, U.S. homeowners are enjoying the largest equity gains in history.
Americans with mortgages saw their home equity increase by an average of $17,000 between July and September 2020, and nationwide equity topped $1 trillion for the first time.
Most current homeowners have growing purchasing power. Significant equity means more profit when selling which can be used to make a larger down payment on their next home. Combined with today’s historically low interest rates, it’s a perfect purchasing storm.
But the growing imbalance between supply and demand keeps home prices rising. Declining inventory led to home price acceleration throughout the last year, surprising during a pandemic when millions lost their jobs.
The median price of an existing home sold in November 2020 was $310,800, a 14.6% increase from November 2019, before the pandemic began.
Despite the limitations, the rate of existing home sales reached a 14-year high by the end of 2020, according to the National Association of Realtors (NAR). The year closed with sales gains in six of its last seven months. The annual sales rate of 6.76 million was up an incredible 22.2% from the year before.
New home sales also rose - up a striking 41.5% higher in October 2020 than October 2019. Builders are also struggling to keep up with demand.
Just 1.28 million homes were available for sale at the end of November - down 22% from a year earlier and lowest since NAR began tracking the metric in 1982.
As a result, the increase in home equity will likely continue through 2021, even as widespread vaccination leads the country into the post-pandemic era.
The Centers for Disease Control recently announced that fully-vaccinated people can interact with each other safely without masks or social distancing. Additionally, the CDC says vaccinated seniors can visit with their healthy children and grandchildren with minimal virus transmission risk.
It remains to be seen what changes will occur in the homeownership market. Surely the technological improvements and touchless protocols instituted in the mortgage and real estate industries are "pandemic positives" that will carry over to the future.
In the meantime, homes are still selling at the fastest pace on record, spending an average of just 21 days on the market.