As home prices steadily rose in cities large and small over the course of the last two years, homeowners had one thing on their mind: equity. And new data out from CoreLogic now gives a glimpse into just how profitable real estate has been for the average homeowner over the course of the pandemic.
As of the end of Q1 of 2022, homeowner equity hit record levels with the average borrower having $280,000 in home equity. That’s a gain of $64,000 over the past year and $125,000 over the past five years.
When mortgage rates hit record lows in 2021, many homeowners who wanted to extract equity from their properties opted to refinance their entire mortgage and take the cash out. As a result, cash-out refinance dollar amounts increased by 35 percent from 2020 to 2021, according to CoreLogic.
Borrowers also increased their use of home equity loans. After decreasing from 2018-2020, the dollar amount of approved lines of credit reached its highest level since 2007 when it increased by 23 percent last year.
Many homeowners turned to their equity to make home improvements and renovations, opting to stay in their property rather than shop among limited inventory. In fact, remodeling expenditures rose to $391 billion in Q1 2022, the largest figure in more than 25 years.
Analysts at CoreLogic predict that while the increases in mortgage rates could slow the rate of home equity extraction, the already-high amounts of home equity and low supply of homes on the market means that remodeling activity should remain strong through the next year.