By: Diana Olick CNBC Real Estate Correspondent
- The profit on a typical home sale last year was just over $94,000, an increase of 45% from the profit in 2020 and 71% from pre-pandemic profits.
- About 42% of homeowners were considered equity-rich at the end of last year
- The amount of tappable equity (equity above the 20% usually required by lenders to back a mortgage) grew by $2.6 trillion last year to a record total of $9.9 trillion.
The stunning jump in home values over the course of the Covid-19 pandemic has given U.S. homeowners record amounts of housing wealth. What they choose to do with it could have impacts on the broader economy.
Annual home price gains averaged 15% in 2021, up from 6% in 2020, according to CoreLogic. Strong pandemic-driven demand, record low supply and record low mortgage rates conspired to create those hefty gains. Bidding wars are now the norm, and desperate buyers are competing with investors who want to cash in on the hot market. The upward trend is continuing, despite winter being historically the slowest season for housing.
“While we expect this year’s buyers will eventually see some relief from the 2021 frenzy, home shoppers continue to face challenging conditions in the early days of 2022,” said Danielle Hale, chief economist for Realtor.com. “In fact, last week’s home price and time on market trends suggest competition intensified.”