While homeowners are rapidly regaining equity after a few tumultuous years, millions of Americans remain tethered to mortgages on properties that have fallen in value, according to a new Home Equity Report published Thursday by CoreLogic.
In the first quarter of 2018, homeowners with mortgages — about 63 percent of all U.S. properties — saw their equity grow 13.3 percent, or $1.01 trillion, year-over-year, according to the new report. Overall, 84,000 properties have regained equity — an upward trend from a low peak during the housing crisis of 2009, when negative equity was at 26 percent. Negative equity occurs when the balance of a homeowner’s mortgage loan is higher than the fair-market price of the property, due to a drop in value.
“Home-price growth has accelerated in recent months, helping to build home-equity wealth and lift underwater homeowners back into positive equity, the primary driver of home equity wealth creation,” said CoreLogic Chief Economist Dr. Frank Nothaft in a prepared statement. “The CoreLogic Home Price Index grew 6.7 percent during the year ending March 2018, the largest 12-month increase in four years.”
Compared to the first quarter of 2017, the average homeowner gained $16,300 in home equity value. In Washington and California, the average homeowner gained $44,000 and $51,000 in home equity, respectively.
That said, CoreLogic predicts that nearly 2.5 million, or 4.7 percent, of U.S. homes are still in negative equity — a 3 percent decrease when compared to the last quarter of 2017. When compared to the first quarter in 2017, the drop feels like cause for celebration — at the beginning of the year, as many as 3.1 million homes in the U.S. had negative equity.
“Home equity balances continue to grow across the nation,” CoreLogic President and CEO Frank Martell said in a prepared statement. “In the far western states, equity gains are fueled by a long run in home price escalation. With strong economic growth and higher purchase demand, we expect these trends to continue for the foreseeable future.”