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    What negative home equity looks like in metro Phoenix — and how it’s trending

    U.S. homeowners with mortgages have seen their equity increase by 29.3% year over year, representing a collective equity gain of more than $2.9 trillion and an average gain of $51,500 per borrower since the second quarter of 2020, according to a new CoreLogic report.

    The company’s Homeowner Equity Report released on Sept. 23 shows that the national negative equity share fell to 2.3% during the second quarter of 2021, representing the lowest share in the last 12 years.

    But that trend was even more pronounced in metro Phoenix, said Selma Hepp, deputy chief economist for CoreLogic.

    “As a result of strong home price growth in recent years, the share of mortgage borrowers with negative equity in Phoenix is now only 1.1%, which is over a 50% point decline from the 60% peak of the housing market collapse in 2010,” she said. “Phoenix is in the top five metro areas that have seen declines in the share negative equity loans compared to the 2010 peak.”

    The rise in homeowner equity in recent years undoubtedly will aid some households that are negatively affected by the pandemic, said Steven Hensley, advisory manager for Zonda housing market research firm.

    “The additional equity will act as a cushion for many whom are facing foreclosure as government intervention ends,” he said. “Rising homeowner equity will also help spur economic and household spending with many households feeling very confident in their financial standing as a result of wealth creation.”

    The incredibly hot U.S. housing market, especially in the West, continues to act as a strong financial buoy for those owners still impacted by Covid-19, said Tom Brophy, research director for Colliers International.

    While the market is less frenetic than it was between the second half of 2020 and the first half of 2021, it still is high relative to the pre-Covid time period, with prices still increasing and inventory of homes available near all-time lows, Brophy said.

    “While both enhanced unemployment benefits and rent/eviction moratoriums have ended, many households are still receiving the paid per child tax credit — $250-350/child based on income — and there are still federal funds available to help with utilities and rent,” he said. “While there are still families struggling, finding gainful employment is the top priority for many to recover from the Covid lockdowns and metro Phoenix has continued to recover faster than much of the country which, as of August 2021, the metro has recouped 93% of the jobs lost to Covid and on pace to fully recover by year-end.”

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