More Money in Home Owners' Pockets

December 9, 2016

More homeowners are gaining equity and climbing out of negative territory, according to a new report released by CoreLogic. Now, 93.7 percent of all mortgaged properties—or 47.9 million homes—have more money invested in them than their estimated market value. Home equity has grown 10.8 percent in the third quarter compared to a year ago.

“Home equity rose by $12,500 for the average homeowner over the last four quarters,” says Frank Nothaft, chief economist for CoreLogic. “There was wide geographic variation with homeowners in California, Oregon, and Washington gaining an average of at least $25,000 in home equity wealth, while owners in Alaska, North Dakota, and Connecticut had small declines, on average.”

Meanwhile, the total number of residential properties with mortgages that remain in negative equity are 3.2 million – or 6.3 percent of all mortgaged homes, CoreLogic reports. Negative equity means that borrowers owe more on their mortgages than their homes are worth. In the fourth quarter of 2009, negative equity peaked at 26 percent of all mortgaged properties and has steadily been declining ever since.

“Price appreciation is the main ingredient for home equity wealth creation, and home prices rose 5.8 percent in the year ending September 2016,” says Anand Nallathambi, president and CEO of CoreLogic. “Pay-down of principal is the second key component of equity building. Many homeowners have refinanced into shorter-term loans, such as a 15-year loan, and by doing so, they have significantly fewer mortgage payments and are able to build equity wealth faster.”

More properties with home equity are concentrated at the high end of the housing market, the CoreLogic report notes. Ninety-six percent of homes valued at greater than $200,000 have equity compared to 90 percent of homes valued at less than $200,000.

The following states had the highest percentage of homes with positive equity:

  • Texas: 98.4%
  • Alaska: 98.1%
  • Colorado: 97.9%
  • Utah: 97.9%
  • Washington: 97.9%

On a metro level, the biggest cities with the highest percentage of mortgaged properties with positive equity are:

  • San Francisco-Redwood City-South San Francisco, Calif.: 99.4%
  • Houston-The Woodlands-Sugar Land, Texas: 98.5%
  • Denver-Aurora-Lakewood, Colo.: 98.4%
  • Los Angeles-Long Beach-Glendale, Calif.: 96.9%
  • Boston: 95.3%

On the other hand, the following states have the highest percentage of mortgaged properties in negative equity:

  • Nevada: 14.2%
  • Florida: 12.5%
  • Illinois: 10.6%
  • Arizona: 10.6%
  • Rhode Island: 10%

Source: CoreLogic