1Q Negative Equity Share Falls to 4.1%

CoreLogic, Irvine, Calif., said 17,000 residential properties regained equity in the first quarter, bringing the total number of mortgaged homes in negative equity to 2.2 million, or 4.1 percent of all mortgage properties.

The company’s quarterly Home Equity Report said U.S. homeowners with mortgages, totaling 63% of all properties, have seen their equity increase by 5.6% year over year, representing a gain of nearly $485.7 billion over the past year.

CoreLogic said the average homeowner gained $6,400 in home equity between first quarter 2018 and first quarter 2019. Some states saw much larger gains; in Nevada, homeowners gained an average of $21,000. In Idaho, homeowners gained an average of $20,700 and Wyoming homeowners gained an average of $20,300.

The report said mortgaged properties in negative equity during the first quarter fell by 11%, or by 268,000 homes, from 2.5 million homes, or 4.7% of all mortgaged properties, a year ago.

“A moderation in home-price growth has reduced the gains in home-equity wealth and will likely slow the growth in home-improvement spending in the coming year,” said CoreLogic Chief Economist Frank Nothaft. “For larger remodeling projects, homeowners often choose to cash-out some of their home equity through a first-lien refinance or placement of a second lien.”

CoreLogic said negative equity peaked at 26% of mortgaged residential properties in fourth quarter 2009. It said the national aggregate value of negative equity was rose to $304.4 billion at the end of the first quarter, up by $2.5 billion from $301.9 billion in the fourth quarter and up year over year by $18 billion from $286.4 billion.

“The country continues to experience record economic expansion as illustrated by these increases in home equity,” said Frank Martell, president and CEO of CoreLogic. “We expect home equity to continue increasing nationally in 2019, albeit at a slower pace than in recent years.”