CoreLogic: Strong economy boosts homeowner equity in 2Q 2018
IRVINE, Calif. – Sept. 24, 2018 – CoreLogic released its National Homeowner Equity Insights Report for Q2 2018: it notes that much of the country is seeing "homeowners emerge from the negative equity trap."
U.S. homeowners with mortgages (which account for roughly 63 percent of all properties) have seen their equity increase by 12.3 percent year-over-year, representing a gain of nearly $981 billion since the second quarter of 2017, according to CoreLogic. About 221,000 residential properties regained equity compared with the first quarter of 2018.
Equity improves nationwide
Additionally, the average homeowner gained $16,200 in home equity between the second quarter of 2017 and the second quarter of 2018. While home equity grew in almost every state in the nation, western states experienced the most significant increases. California homeowners gained an average of approximately $48,800 in home equity, and Washington homeowners experienced an average increase of approximately $41,100 in home equity
From the first quarter to the second quarter of 2018, the total number of mortgaged homes in negative equity decreased 9 percent to 2.2 million homes or 4.3 percent of all mortgaged properties. Year-over-year, the number of mortgaged properties in negative equity fell 20.1 percent from 2.8 million homes – or 5.4 percent of all mortgaged properties – in the second quarter of 2018.
"Homeowner properties continued to increase in value this quarter with homeowners gaining an average of $16,200 in home equity wealth," said Dr. Frank Nothaft, chief economist for CoreLogic. "When aggregated across all homeowners that totals almost $1 trillion in gains in home equity wealth. This wealth gain will support additional consumption spending and home improvement expenditures in coming years."
Negative equity, often referred to as being underwater or upside down, applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in a home's value, an increase in mortgage debt or both. Negative equity peaked at 26 percent of mortgaged residential properties in the fourth quarter of 2009, based on the CoreLogic equity data analysis which began in the third quarter of 2009.
The national aggregate value of negative equity was approximately $279.8 billion at the end of the second quarter of 2018. This is down quarter over quarter by approximately $5.5 million, from $285.3 billion in the first quarter of 2018.
"Negative equity levels continue to drop across the US with the biggest declines in areas with strong price appreciation," said Frank Martell, president and CEO of CoreLogic. "Further, the relatively low level of shadow inventory contributes to the chronic shortage of housing supply and price increases in many markets."
However, among those metro areas experiencing negative equity, Miami, Fla. may be hurting the most, with the negative equity share of all mortgages standing at 11.4 percent year over year.
The Homeowner Equity Insights report is published quarterly with coverage at the national, state and Core Based Statistical Area/Metro level and includes negative equity share and average equity gains, according to CoreLogic.
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