Pace of Homes with Negative Equity Slow in 3Q

December 7, 2018

CoreLogic, Irvine, Calif., said homeowners with negative equity fell to just 81,000 in the third quarter, the smallest quarterly decline since 2010.

The company’s quarterly Home Equity Report said mortgaged homes in negative equity decreased by 4 percent to 2.2 million homes or 4.1 percent of all mortgaged properties. Year over year, the number of mortgaged properties in negative equity fell by 16 percent from 2.6 million homes (5 percent of all mortgaged properties) in the third quarter.

CoreLogic said U.S. homeowners with mortgages (63 percent of all properties) have seen their equity increase by 9.4 percent year over year, representing a gain of nearly $775.2 billion from a year ago.

Additionally, the average homeowner gained $12,400 in home equity between third quarter 2017 and third quarter 2018. While home equity grew in almost every state, western states experienced the most significant increases. California homeowners gained an average of $36,500 in home equity, and Nevada homeowners experienced an average increase of $32,600 in home equity.

“On average, homeowners saw their home equity increase again this quarter but not nearly as much as in previous quarters,” said CoreLogic Chief Economist Frank Nothaft.

Negative equity peaked at 26 percent of mortgaged residential properties in fourth quarter 2009, based on the CoreLogic equity data analysis which began in third quarter 2009.

CoreLogic said the national aggregate value of negative equity fell to $281.6 billion at the end of the third quarter, down quarter over quarter by $1.1 billion from $280.5 billion in the second quarter and down year over year by $2.7 billion, from $279 billion.

“The number of homes in a negative equity position have remained around 2.2 million for two consecutive quarters this year,” said Frank Martell, president and CEO of CoreLogic. “Without equity, those homeowners are unable to sell their homes and are more likely to transition from delinquency to foreclosure if they face financial distress.”