CoreLogic: Homeowner Equity Increased by $908 Billion in 2017

CoreLogic, Irvine, Calif., said home price growth helped homeowners gain $908 billion in equity during 2017.

The company’s quarterly Home Equity Report said homeowners with mortgages (which account for roughly 63 percent of all properties, according to a 2016 American Community Survey) have seen their equity increase 12.2 percent year over year, representing a gain of $908.4 billion from a year ago.

Additionally, homeowners gained more than $15,000 in home equity between fourth quarter 2016 and fourth quarter 2017. While home equity grew nationwide, western states experienced the largest increase. Washington homeowners gained an average of $40,000 in home equity, and California homeowners gained an average of $44,000 in home equity (Figure 1).

On a quarter-over-quarter basis, through fourth quarter 2017, mortgaged homes in negative equity decreased by 1 percent to 2.5 million homes, or 4.9 percent of all mortgaged properties (third quarter data were revised). Negative equity in the fourth quarter decreased by 21 percent year over year from 3.2 million homes, or 6.3 percent of all mortgaged properties, a year ago. Negative equity peaked at 26 percent of mortgaged residential properties in fourth quarter of 2009

“Home-price growth has been the primary driver of home-equity wealth creation,” said CoreLogic Chief Economist Frank Nothaft. “Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to U.S. consumption spending over the next two to three years.”

CoreLogic said the national aggregate value of negative equity totaled $283.1 billion at the end of the fourth quarter, up by $5.7 billion (or 2.1 percent), from $277.4 billion in the third quarter but down year over year by $3.2 billion (or 1.1 percent), from $286.3 billion.

“There are wide disparities in home-equity gains by geographic area, with higher-priced, capacity constrained markets along the East and West Coasts registering the largest increases,” said Frank Martell, president and CEO of CoreLogic. “The average homeowner in California and Washington had a wealth gain of about $40,000, reflecting the high price of homes in California and the rapid appreciation in Washington. In contrast, the average owner in Louisiana had little change in their housing wealth during 2017, given much lower prices and modest price growth.”