Major home equity growth helps homeowners avoid foreclosure

U.S. homeowners with mortgages saw the equity in their homes rise an average of 31.1 percent between the third quarter of 2020 and the third quarter of this year, according to data released this week.

That was a collective equity gain of more than $3.2 trillion – an average gain of $56,700 per borrower – in that 12-month period, Irvine-based CoreLogic reported.

An estimated 70,000 properties regained equity following record growth in home prices during the summer. That helped about 1.2 million homeowners avoid foreclosure in the third quarter.

“Not only have equity gains helped homeowners more seamlessly transition out of forbearance and avoid a distressed sale, but they’ve also enabled many to continue building their wealth,” said Frank Martell, CoreLogic’s president and chief executive officer, in a statement. “This financial reserve will be especially helpful for homeowners looking to fund renovation projects.”

In the third quarter of 2020, 1.6 million homes, – three percent of all mortgaged properties – were in negative equity. That was a 29 percent drop from the third quarter of 2021, according to CoreLogic.