Americans’ Home Equity War Chest Continued to Grow in Q1

Equity controlled by American homeowners climbed by $766 billion between the first quarters of 2016 and 2017, with nearly 63% of all homeowners tallying some kind of equity increase during that span — and the average mortgage borrower seeing seeing a boost of $14,000.

That brings the total of borrowers who have regained home equity since the worst of the housing crisis in 2011 to just about 9 million, according to new data from real estate research firm CoreLogic. 

“The rising cushion of home equity is one of the main drivers of improved mortgage performance,” CoreLogic president and CEO Frank Martell wrote in the report. “Since home equity is the largest source of homeowner wealth, the increase in home equity also supports consumer balance sheets, spending, and the broader economy.” 

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As it has in previous quarters, the West continued to see the most impressive equity gains, with Washington State homeowners claiming the largest average increase in home equity of $38,000 between 2016 and 2017. California homeowners came in second with $26,000, and after a quick trip back to New York for third place and $25,000, three western states tied for fourth: Oregon, Utah, and Colorado homeowners all reaped an average equity increase of $24,000.

“One million borrowers achieved positive equity over the last year, which means mortgage risk continues to steadily decline as a result of the home price increases,” CoreLogic chief economist Frank Nothaft said in the report.

Perhaps intuitively, CoreLogic found that those with higher-value homes benefited the most from these positive trends: 96% of homeowners with residential properties worth $200,000 or more had some kind of equity, compared to 90% for owners of homes worth less than $200,000.

But the news isn’t all good: While the nationwide amount of negative equity declined by 7.1% — from $304.5 billion in the first quarter of 2016 to $283 billion in 2017 — CoreLogic found that 6.1% of homes are still underwater, with even higher percentages in states like Nevada (12.4%), Florida (11.1%), and Illinois (10.5%).

“Pockets of concern remain with markets such as Miami, Las Vegas, or Chicago, which are top three markets for negative equity among large metros — and each has a negative equity share at least twice or more the national average,” Nothaft said.

Read the full report here.

Written by Alex Spanko

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