In luxury markets like San Diego, homeowners have seen major equity gains throughout the COVID-19 … [+]
At the start of 2021, the home market is overwhelmingly in favor of buyers. With a lack of homes on the market and cheap interest rates, buyers are driving up housing prices. The U.S. housing market avoided a downturn during the pandemic, but it went on one of the hottest streaks in American history during this time. Bidding wars were at an all-time high as the number of homes on the market fell to its lowest level in 40 years. Fast-forward to now, and the median home price across the country has risen more than 25% and the overall worth of U.S. properties are reaching unprecedented levels.
CoreLogic, a leading global property information, analytics, and data-enabled solutions provider, recently released its Q3 Homeowner equity report. The findings are impressive. According to the report, “U.S. homeowners with mortgages (which account for roughly 63% of all properties) have seen their equity increase by 31.1% year over year, representing a collective equity gain of over $3.2 trillion, and an average gain of $56,700 per borrower, since the third quarter of 2020”
This luxurious home in the Muirlands section of La Jolla in San Diego is listed for $8.895 million.
Supply-and-demand plays a vital role in the current market and supports substantial equity gains in luxury markets such as San Diego. Andy Nelson, president of San Diego-based luxury brokerage Willis Allen Real Estate, goes behind the numbers: “In general, when the pandemic hit the normal moving out of bigger homes by older sellers stopped. They all stayed in place and didn’t move while demand kept getting stronger and stronger.”
The market also benefited from buyers migrating in-state. “Then you had biotech people relocating from San Francisco to San Diego for more outside space and great weather. Increased demand from buyers and limited supply because sellers didn’t want to move drove up the equity for homeowners,” Nelson adds.
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San Diego’s luxury market has benefited from an influx of buyers leaving dense areas such as New … [+]
Luxury homes for sale in San Diego reflect the supply-and-demand climate 2021 comes to a close. An 8,000 square foot La Jolla estate in the most desirable Muirlands neighborhood is on the market for $8,895,000. Partial ocean views share space with a large pool adjacent lap pool, spa, custom putting green, fire pit, sauna, home theatre, and 1,100 bottle wine cellar to name a few of the estate’s amenities.
On Coronado Island, just over the bridge from San Diego’s downtown, an elegant three-bedroom, three-bathroom condominium is listed at $2,595,000. It has reach-out-and-touch views of the bay, downtown skyline, and the Coronado Beach.
Large-lot communities such as Rancho Santa Fe have been in high demand during the pandemic. This … [+]
In the equestrian community of Rancho Santa Fe, where properties are on multi-acre lots, is a 6,910 square foot estate on 2.82 acres. It’s on the market for $4,200,000 and has a riding ring and a detached 1,200 square foot guest house.
CoreLogic reports Summer of 2021 saw home price growth reach the highest level in more than 45 years. This moved equity gains to another record high. Of equal importance is those equity gains allowed 70,000 properties around the country to regain equity in Q3 2021. Most notably, “these equity gains provided a crucial barrier against foreclosure for the 1.2 million borrowers who reached the end of forbearance in September,” the report states.
Flexible space has been atop buyers’ wishlists in 2021.
“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, president and CEO of CoreLogic. “This financial reserve will be especially helpful for homeowners looking to fund renovation projects.” CoreLogic’s proprietary Home Price Index saw home prices rise 17.7% for the past 12 months ending in September, “spurring record gains in home equity wealth,” Martell adds.
“Now sellers are saying I don’t want an older home or one this large, but I can’t find what I want to buy,” Nelson says. These homeowners are looking at a big tax consideration with how well they’ve done with equity growth. So, they decided to remodel or put in an elevator if they are older. The result is they are not selling and there is little new inventory. The demand is still there so prices are still rising,”
When the Q4 2021 numbers come in, expect to see more major homeowner equity gains.
Willis Allen Real Estate is a founding member of Forbes Global Properties, a consumer marketplace and membership network of elite brokerages selling the world’s most luxurious homes.
