CoreLogic: 2Q Negative Equity Share Falls to 3.8%

CoreLogic, Irvine, Calif., said U.S. homeowners with mortgages saw their equity increase by 4.8% year over year, representing a gain of nearly $428 billion from a year ago.

The company’s quarterly Home Equity Report said the average homeowner gained $4,900 in home equity between second quarter 2018 and second quarter 2019. States that saw the largest gains include Idaho, where homeowners gained an average of $22,100; Wyoming, where homeowners gained an average of $20,400; and Nevada, where homeowners gained an average of $16,800.

The report said from first quarter 2019 to second quarter 2019, the total number of mortgaged homes in negative equity decreased by 7% to 2 million homes, or 3.8% of all mortgaged properties. Mortgaged properties in negative equity during the second quarter fell by 9%, or 151,000 homes, compared to a year ago when 2.2 million homes, or 4.3% of all mortgaged properties, were in negative equity.

“Borrower equity rose to an all-time high in the first half of 2019 and has more than doubled since the housing recovery started,” said Frank Nothaft, chief economist for CoreLogic. “Combined with low mortgage rates, this rise in home equity supports spending on home improvements and may help improve balance sheets of households who could take out home equity loans to consolidate their debt.”

CoreLogic said negative equity peaked at 26% of mortgaged residential properties in fourth quarter 2009.

The report said the national aggregate value of negative equity fell to $302.7 billion at the end of the second quarter, down by $2.6 billion, or 0.8%, from $305.3 billion in the first quarter but up year over year by $21 billion, or 7.5%, from $281.7 billion a year ago.

“Home values have continued to rise in most parts of the country this year and we are seeing the benefit in higher home equity levels,” said Frank Martell, president and CEO of CoreLogic.

The report said the western half of the U.S. experienced particularly strong gains in home equity recently. In July, South Dakota and Connecticut were the only two states to post annual home price declines. These losses mirror the states’ home equity performances during the second quarter as both reported negative home equity gains per borrower.