U.S. homeowners have seen a remarkable rise in their home values since the Covid-19 pandemic. This has resulted in a record amount of wealth. The choices they make with their wealth could impact the wider economy. 

CoreLogic reports that annual home price increases averaged 15% by 2021. This is an increase of 6% from 2020. These huge gains were made possible by strong pandemic-driven demand and record low supply. Now, bidding wars are the norm and investors are looking to make a profit on this hot market. Despite winter historically being the slowest time for housing, there is an upward trend.

Danielle Hale is chief economist of Realtor.com. “While we believe this year’s buyer will see some relief from 2021 frenzy,” she said. According to Realtor.com, “In reality, last week’s home price as well as time spent on market trends suggests that there has been increased competition.”

Although there was a lack of home sellers in 2021 the profits for those who listed their properties were very good. According to ATTOM (a national property database), the average home sale made a profit of just $94,000 last year. It is up by 45% from 2020 profit and up 71% from prepandemic profits. This growth was witnessed in the majority of local housing market. 

Todd Teta (ATTOM’s chief product officer) stated that “Households who escaped the effects of the pandemic did not lose their jobs and rushed to enter the market as a way to cope with the crisis.” The surge is likely to slow this year, but there are some warning signs. However, 2021 will be remembered as the most difficult year for both sellers and buyers. 

This was the largest profit since 2008. 2008 was the previous housing boom. That boom was built upon faulty mortgages, homeowners who had little or no equity and homeowners with a lot of debt. This is no longer the case. 

Even those homeowners weren’t selling their homes were earning equity. At the end of 2017, 42% of equity-rich homeowners had mortgages equal to or greater than their home’s value. This wealth is much higher than 30% of equity-rich homeowners who were at the end 2020. Nine out of the ten top equity-rich state were located in the West. This includes Arizona, Utah, Washington, and Washington.

These were the states that had the lowest housing wealth, mainly the Midwest and South (Illinois, Louisiana, and Mississippi).