Rising home prices have meant most homeowners have seen significant gains in equity over the past year. That may prove to be a critical buffer to help owners hit hard by economic uncertainty during the pandemic avoid foreclosure.

In the second quarter, the average annual equity gain for borrowers was $51,550, five times that of a year ago, according to CoreLogic’s latest Equity Report.

“While the coronavirus pandemic created economic uncertainty for many, the continued acceleration in home prices over the last year has meant existing homeowners saw a notable increase in home equity,” Molly Boesel, chief economist at CoreLogic, says in a column at the real estate research firm’s website. “The accumulation of equity has become critically important to homeowners deciding on their post-forbearance options.”

During the Great Recession, borrowers underwater on their mortgages were facing plummeting home prices. Nowadays, however, most borrowers who are behind on their mortgage payments can tap into their equity and sell their home rather than lose it to foreclosure, Boesel says.

That said, some homeowners may still be at risk. The states with high negative equity have seen the lowest home price appreciation compared with the national average. The following are the places most at risk for foreclosure and distressed sales, according to CoreLogic’s analysis.

Millennials have been a closely watched group in real estate for years, and forecasters have long made predictions about their entrance into homeownership. The beliefs about this massive segment of potential buyers have been significant—they favor renting over buying, they just want to live in the city, and they must have their parents’ help to buy.

Jessica Lautz, vice president of demographics and behavioral insights at the National Association of REALTORS®, recently blogged about the most common myths about millennials at the association’s blog. Here are some myths she busted:

Myth 1: Millennials aren’t interested in homeownership.

The homeownership rate for those under the age of 35 is lower than previous generations at the same age. However, millennials are still active in the housing market. They are facing plenty of challenges in obtaining homeownership: low housing inventories, competition, and rising home prices. But they are the largest generation of home buyers currently in the market at 37%, Lautz notes.

Myth 2: Millennials just want to live in the city.

Millennials love the suburbs after all. The majority of older and younger millennials have purchased a home in the suburbs; one-fifth of these young adults purchased in small towns, Lautz says. “The affordability of suburban areas is a driver,” Lautz noes. “Younger millennial buyers place a top priority on being close to friends and family while purchasing.”

Myth 3: Millennials need parents’ funds to buy.

The majority of millennials use their own savings to buy. Nearly a third of older millennials use proceeds from their previous home sale as a down payment on their next home. But millennials aren’t shy about accepting some help from their parents either: Twenty percent of millennials ages 31 to 40 and 28% between 22 to 30 report receiving a gift or loan from family and friends to purchase a home, Lautz notes.

Myth 4: If millennials would save more, they could buy.

Millennials have been hit with a lot of bills—housing in particular. The costs of rents have surged and that’s made it difficult to afford homeownership. “Younger millennials are spending more on housing, education, and slightly more on health care,” Lautz notes. “Younger boomers, in comparison, spent more on transportation, food away from home, apparel and services, and entertainment.”

The dollar value of mortgages home buyers are taking out is soaring as they try to afford higher home prices.

The average amount for a mortgage averaged $410,000 last week, according to data from the Mortgage Bankers Association. That marks the highest average mortgage amount since May.

“With home price appreciation continuing to run hot, increasing more than 19% annually in July, applications for larger loan amounts continue to outpace lower-balance loans,” says Joel Kan, the MBA’s associate vice president of economic and industry forecasting.

While home prices continue to rise, they are inching up by smaller annual gains than they have been. The National Association of REALTORS® reported a 14.9% annual gain in home prices for August’s existing-home sales.

Also, more housing inventory is coming onto the market. Nearly one-third of the 50 largest metros saw increases in the number of newly listed homes compared to last year, according to a new report from realtor.com®. That said, there are still fewer homes for sale than a year ago.

As buyers face higher home prices, they’ll need to set a budget and stick to it as they continue to face competition for homes. Most financial experts recommend homeowners limit their spending to 30% of their take-home pay for housing. That 30% also considers additional expenses of homeownership, like property taxes, homeowners insurance, private mortgage insurance (if applicable), and homeowners association fees.

The 30-year fixed-rate mortgage averaged 3.01% this week, posting a sharp rise after spending nearly four months below 3%. Economists expect mortgage rates to continue to increase modestly over the next few months.

“Mortgage rates rose across all loan types this week as the 10-year Treasury yield reached its highest point since June,” says Sam Khater, Freddie Mac’s chief economist. “Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation, and emerging energy supply shortages, which compound other labor and materials shortages.”

An increase in mortgage rates over the next few months—even though expected to be slight—“will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year,” Khater adds.

Still, mortgage rates are hovering near their record lows. “Consumers shouldn’t panic,” Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS®, writes on the association’s blog. “Keep in mind that even though rates will increase in the following months, these rates will still be historically low.” NAR forecasts the 30-year fixed-rate mortgage to average 3.5% by mid-2022.

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 30:

• 30-year fixed-rate mortgages: averaged 3.01%, with an average 0.7 point, up from a 2.88% average last week. A year ago, 30-year rates averaged 2.88%.
• 15-year fixed-rate mortgages: averaged 2.28%, with an average 0.6 point, increasing from last week’s 2.15% average. A year ago, 15-year rates averaged 2.36%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.48%, with an average 0.3 point, increasing from last week’s 2.43% average. A year ago, 5-year ARMs averaged 2.90%.

Freddie Mac reports average commitment rates along with average points to better reflect the total upfront cost of obtaining a mortgage.

More Americans are desiring bigger homes since the pandemic—and builders are responding. The share of new single-family homes with four or more bedrooms posted a sharp uptick, unlike in recent years, the National Association of Home Builders reports on its Eye on Housing blog.

The share of single-family homes started with four bedrooms or more rose from 42.6% in 2019 to 45.2% in 2020.

“These developments are linked to changes in the makeup of home buyers from the previous years,” Litic Murali reports on NAHB’s Eye on Housing blog. “In 2020, the detrimental economic effects of the COVID-19 pandemic, a low-interest-rate environment in the U.S., and low housing supply together drove prices up, leaving some prospective first-time home buyers out of the market. Successful buyers were generally looking for more space.”

The need for more space also may be growing as Americans embrace multigenerational living. About 16% of buyers have opted for a multigenerational home since the start of the COVID-19 pandemic, compared to 11% the previous year, according to 2020 data from the National Association of REALTORS®. NAR’s data shows the most common reason for a multigenerational home this year was to care for and spend more time with older parents, followed by cost savings and the ability to pool several incomes.

However, as homes get larger, lots sizes are shrinking. An analysis of the U.S. Census Bureau by StorageCafe shows that the median home size is now about 2,260 square feet—up from 2,170 square feet in 2010. The median lot size, however, on a new home has decreased nearly 18% (10,500 square feet in 2010 to 8,700 square feet in 2020).

Home buyers are finding more housing selections this fall, but they’re still up against some serious competition. Nearly one-third of the 50 largest metros saw increases in the number of newly listed homes compared to last year, according to a new report from realtor.com®.

“This September, buyers had more options than they’ve had all year and while that’s typical of early fall, that’s not what happened in 2020,” says Danielle Hale, realtor.com®’s chief economist. “Still, it’s important to remember that while buyers may have an easier time this fall than they did in the spring, the market remains more competitive than it has been historically at this time of year.”

There are still fewer homes for sale than a year ago, and less than half as many two years ago before the pandemic, Hale says. Homes are also still selling faster than in 2020 too.

The U.S. median home price continued to hold at August’s near record-high of $380,000. List prices are up 20.6% compared to pre-pandemic levels in 2019, realtor.com® notes. The top five markets with the highest price growth rate are in Austin, Texas (+33.6%); Las Vegas (+24.6%); Tampa, Fla. (+20.8%); Orlando (+16.9%); and Riverside, Calif. (+15.4%).

Some areas of the country are seeing more new listings added to the market than others. New listings have grown the most in competitive markets like Austin, Texas; Portland, Ore.; Jacksonville, Fla.; and Washington, D.C.—all with inventories up more than 10% year-over-year.

Meanwhile, the areas with some of the largest drops in newly listed homes in September tend to be in places that were affected by Hurricane Ida, including the Northeast (down 5.4%) and South (down 3.2%). New listings declined the most in the hard-hit area of like New Orleans, down 51.2%, according to realtor.com®.