CoreLogic: 1 Million Borrowers Regained Equity in 2016

CoreLogic, Irvine, Calif., said U.S. homeowners with mortgages (63 percent of all homeowners) saw their collective equity increase by $783 billion in 2016, an increase of 11.7 percent.

The report said rising home prices enabled just more than one million borrowers to emerge from negative equity during 2016, increasing the percentage of homeowners with positive equity to 93.8 percent of all mortgaged properties, or 48 million homes.

CoreLogic reported in the fourth quarter, mortgaged residential properties with negative equity stood at 3.17 million, or 6.2 percent of all homes with a mortgage, representing a decrease of 2 percent quarter over quarter from 3.23 million homes, or 6.3 percent of all mortgaged properties, in the third quarter and a decrease of 25 percent year over year from 4.23 million homes, or 8.4 percent of all mortgaged properties, from a year ago.

The report said negative equity peaked at 26 percent of mortgaged residential properties in Q4 2009 based on CoreLogic equity data analysis, which began in Q3 2009.

CoreLogic reported the national aggregate value of negative equity totaled $283 billion at the end of the fourth quarter, down quarter over quarter by $700 million, or 0.3 percent, from $283.7 billion in the third quarter and down year over year by $26 billion, or 8.4 percent, from $308.9 billion at the end of 2015.

“Average home equity rose by $13,700 for U.S. homeowners during 2016,” said Frank Nothaft, chief economist for CoreLogic. “The equity build-up has been supported by home-price growth and paydown of principal.”

Nothaft notd the CoreLogic Home Price Index for the U.S. rose by 6.3 percent over the year ending December. Nearly one-fourth of all outstanding mortgages have a term of 20 years or less, which amortize more quickly than 30-year loans and contribute to faster equity accumulation.

Other report highlights:
–Texas had the highest percentage of homes with positive equity at 98.4 percent, followed by Hawaii (98.1 percent), Alaska (97.9 percent), Colorado (97.9 percent), Oregon (97.9 percent), Utah (97.9 percent) and Washington (97.9 percent).
–On average, homeowner equity increased by $13,700 from Q4 2015 to Q4 2016 (for mortgaged properties). Washington had an average increase of $31,000, while Delaware experienced a small decline.
–Nevada had the highest percentage of homes with negative equity at 13.6 percent, followed by Florida (11.6 percent), Illinois (11.1 percent), Rhode Island (10 percent) and Arizona (9.8 percent). These top five states combined account for 29.7 percent of negative equity in the U.S., but only 16.3 percent of outstanding mortgages.
–Of the 10 largest metropolitan areas by population, San Francisco had the highest percentage of mortgaged properties in a positive equity position at 99.4 percent, followed by Houston (98.5 percent), Denver (98.5 percent), Los Angeles (97 percent) and Boston (95.3 percent).
–Of the same 10 largest metropolitan areas, Miami had the highest percentage of mortgaged properties with negative equity at 16.1 percent, followed by Las Vegas (15.5 percent), Chicago (12.6 percent), Washington, D.C. (8.4 percent) and New York (5.1 percent).