Rising mortgage rates and
high property values may be shutting some buyers out of the real estate market,
but for homeowners with mortgages, their equity has increased by double digits
year over year during the first three months of 2018.
Last week, CoreLogic
released its Home Equity Report for the first quarter of 2018, which showed
that equity increased 13.3% from a year ago, representing a $1.01 trillion gain
since the first quarter of last year. What's more, CoreLogic found that the
average homeowner gained $16,300 in home equity from the first quarter of last
year to the first quarter of 2018.
"Home-price growth has
accelerated in recent months, helping to build home-equity wealth and lift
underwater homeowners back into positive equity," said Frank Nothaft,
chief economist for CoreLogic in a press release announcing the results of the research.
"The CoreLogic Home Price Index grew 6.7% during the year ending March
2018, the largest 12-month increase in four years. Likewise, the average growth
in home equity was more than $15,000 during 2017, the most in four years."
While CoreLogic said that
home equity increased across the country, western states saw the largest
uptick, with homeowners in Washington on average gaining around $44,000 in home
equity and homeowners in California gaining an average of about $51,000 in home
equity. As for the number of homes with a mortgage that has negative equity,
CoreLogic saw a decline of 3% to under 2.5 million homes, or 4.7% of
all properties that have a mortgage, from the fourth quarter of 2017 to the
first quarter of 2018. On a year-over-year basis, CoreLogic said that negative
equity decreased 21% from 3.1 million homes, or 6.1% of all mortgaged
properties.
Negative equity, which is
often referred to as being underwater or upside down, happens when a borrower
owes more on a mortgage than the home is worth. Negative equity, CoreLogic
noted, peaked at 26% of mortgaged homes in the fourth quarter of 2009. As of
the end of the first quarter of 2018, total negative equity was around $284.8
billion, which is up by around $100 million from the fourth quarter.
"Home equity balances
continue to grow across the nation," noted Frank Martell, president and
CEO of CoreLogic, in the same press release. "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."
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