The amount of equity in mortgaged real estate increased by $1.9 trillion in Q1 2021, an annual increase of 19.6%, according to the lastest CoreLogic Homeowner Equity Report . The average annual gain in equity was $33,400 per borrower — the largest average equity gain in at least 10 years. The nationwide negative equity share for Q1 2021 was 2.6% of all homes with a mortgage, the lowest share of homes with negative equity since CoreLogic started tracking this number in the third quarter of 2009.
In March 2021, 4.9% of home mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure), a sharp decrease from February 2021 according to the latest CoreLogic Loan Performance Insights Report. The 0.8 percentage point decrease in the delinquency rate from February was the largest since the start of the pandemic and could be partly attributed to the largest one-month increase in employment since August 2020.
National home prices increased 13% year over year in April 2021, according to the latest CoreLogic Home Price Index (HPI®) Report. The April 2021 HPI gain was up from the April 2020 gain of 4.6% and was the highest year-over-year gain since February 2006. Low mortgage rates and low for-sale inventory drove the increase in home prices. While a pick-up in construction and an increase in for-sale listings as more homeowners get vaccinated may help moderate surging home price growth, affordability challenges may drive some potential home buyers out of the market which could reduce demand.
Months into 2021, housing supply remains at historically low levels while the impact from the pandemic and low mortgage interest rates linger. This has meant that some potential sellers are still holding on to their properties in fear of the virus while homebuyers are flooding the market, trying to capture the benefits of low mortgage interest rates. Together, these have shrunk the already small supply of available homes.
Lack of availability of homes for sale has been the Achilles’ heel of many housing markets across the country even prior to 2020, and the COVID-19 pandemic has only exacerbated the shortfall. Since the Great Recession, the inventory of homes for sale has been on a decline and has reached its lowest recorded levels in recent months. From the 1980s to early 2000s, the annual number of homes for sale averaged 1.9 million. In 2020, the number fell below 1 million.
Three important factors in mortgage underwriting are debt-to-income (DTI) ratios, loan-to-value (LTV) ratios and credit scores. Over the course of the pandemic, we have seen a decrease in the average DTI and LTV as well as an increase in the average credit score of loan applicants. There are two possible reasons for this change: either the risk attributes of applicants have changed, or lenders’ credit underwriting standards have changed due to an uncertain economic outlook.
U.S. single-family rent growth quickened in March 2021, increasing 4.3% year over year, showing solid improvement from the low of 1.4% reported for June 2020, and up from the 3% rate recorded for March 2020, according to the CoreLogic Single-Family Rent Index (SFRI). The index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time.
The U.S. shed more than 22 million jobs in March and April 2020 as the economy felt the full impact of the pandemic shutdown. These jobs have been coming back, and as of February 2021, the U.S. has recovered 58% of the jobs lost in 2020. However, the job recovery has been felt differently across the country with some states showing full recoveries and others lagging far behind.
The latest loan performance data from CoreLogic shows that the nation’s mortgage delinquency rate in February 2021 was 5.7%, a small increase from January’s 5.6%. The delinquency rate calculates the number of loans in various stages of distress — 30-59 days past due, 60-89 days past due, 90+ days past due, and foreclosures — as a percentage of all first-lien mortgages in servicing.
In February 2021, 5.7% of home mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure), a small increase from January 2021, and a 2.1-percentage point increase from February 2020 according to the latest CoreLogic Loan Performance Insights Report. The slight (0.1 percentage point) increase over January 2021 marked the first uptick in month-to-month national delinquency since August 2020.
This month marks the 125th anniversary of the Dow Jones Industrial Average, a stock-value metric for 30 blue-chip U.S. companies. There are very few assets that have such a long valuation history, and fortunately single-family housing is one such asset. To commemorate the quasquicentennial, let’s compare how stock and home prices have fared over time.
National home prices increased 11.3% year over year in March 2021, according to the latest CoreLogic Home Price Index (HPI®) Report. The March 2021 HPI gain was up from the March 2020 gain of 4.6% and was the highest year-over-year gain since March 2006.
Since the pandemic began over a year ago, a supply shortage of for-sale homes has fueled home price growth. The national CoreLogic Home Price Index posted double-digit year-over-year growth in February. In other words, home price growth has doubled since the time just before the pandemic.
Strong acceleration of S&P CoreLogic Case-Shiller Index continued into early months of 2021 with the third consecutive double-digit increase – up 12% year-over-year in February. The month-to-month index also surged 1.05%, making it the strongest January-February increase since 2005. Further acceleration in home price growth is reflecting many of the positive and continually improving signs of the economic recovery, including employment gains, consumer savings resulting from less discretionary spending over the last year, and hence more purchase power among home buyers, and still historically low mortgage rates. As a result, competition among buyers continues to intensify leading to fewer days on the market and higher offering prices than would be seasonally the case early in the year.
While home prices skyrocketed in response to low interest rates and low housing stock, single-family rental properties have also experienced a pickup in rent price growth. Single-family rents posted 3.9% year-over-year growth in February 2021; this was the strongest February in the past 5 years, as measured by the CoreLogic® Single-Family Rent Index (SFRI). Recovering from the low of 1.4% year-over-year growth in June 2020, the index has shown solid increases since the second half of 2020, propped up by the rent growth in detached properties. By October 2020, the rent growth compared to a year prior had returned to pre-pandemic levels.
The COVID-19 pandemic has highlighted the importance of homeownership and its impact on wealth accumulation among American households. Home prices soared, and among homeowners with a mortgage, the average equity gains were over $26,000 in 2020, bringing the total average equity to more than $200,000 per homeowner. While equity gains have varied significantly across the nation, in general, the availability of home equity has been the principal form of savings and household wealth for low- to moderate-income homeowners. In particular, home equity can serve as a critical financial buffer in times of economic uncertainty, such as what we experienced during the pandemic. Indeed, homeownership is a key method of accruing wealth, so differences in the attainability of homeownership directly result in differences in wealth.
For the last five years, millennials have made up the largest share of home purchase mortgage applications. This demographic tailwind comprises the largest generation of households who are approaching their first-time homebuying years. Older millennials, meanwhile, are in the age-range for a move-up purchase. According to the CoreLogic Loan Application Database, prior to 2020, while millennial home purchase applications comprised less than half of all purchase applications, their share grew from 33% in 2014 to 47% in 2019, rising about 2 to 4 percentage points per year. This annual increase is consistent with the cohort of millennials reaching 33 years of age, the peak homebuying age.
In January 2021, 5.6% of home mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure)\[1\], a small decrease from December 2020, and the fifth consecutive monthly decrease. While this is good news, the overall delinquency rate remained high and was 2.1 percentage points above the year ago level, according to the latest CoreLogic Loan Performance Insights Report. The share of mortgages that were 30 to 59 days past due – considered early-stage delinquencies – was 1.3% in January 2021, down sharply from a post-pandemic high of 4.2% in April 2020 and the lowest rate recorded in at least 22 years.
National home prices increased 10.4% year over year in February 2021, according to the latest CoreLogic Home Price Index (HPI®) Report. The February 2021 HPI gain was up from the February 2020 gain of 4.3% and was the highest year-over-year gain since April 2006. Low mortgage rates and low for-sale inventory drove the increase in home prices; however, affordability constraints may work to slow home price growth later this year, especially as mortgage rates increase.
Robust home price growth, which averaged 5.7% nationally over the last year according to the CoreLogic Home Price Index , drove equity of America’s homeowners with a mortgage up by more than $1.5 trillion. Added together across all homeowners in the U.S., home equity has grown more than $12 trillion since its low point during the Great Recession. This is good news for homeowners —but the situation is a little trickier when it comes to how that $12 trillion is spread, and which of those homeowners are currently in a stage of forbearance. For families who have a low amount of equity and are in forbearance, the risk of losing their home becomes higher.