As the housing market heats up and property values continue to rise across the country, many homeowners are seeing the equity in their homes increase quite significantly in recent months.
A new Q1 2017 report by CoreLogic shows U.S. homeowners with mortgages (approximately 63% of all homeowners) have seen their equity rise by a total of $766.4 billion since Q1 2016, an increase of 11.2%. CoreLogic said that the average homeowner had seen about a $13,400 gain in equity between Q1 2016 and Q1 2017.
Homeowners with negative equity or what are sometimes referred to as underwater on their mortgages were down 3% from Q4 2016* to 3.1 million homes, or 6.1% of all mortgaged properties. Compared to Q1 2016, negative equity decreased 24 percent from 4.1 million homes, or 8.1 percent of all mortgaged properties.
The national aggregate value of negative equity was approximately $283 billion at the end of Q1 2017, a drop quarter over quarter by about $2.6 billion, or 0.9%, from $285.5 billion in Q4 2016 and down year over year by approximately $21.5 billion, or 7.1%, from $304.5 billion in Q1 2016, according to CoreLogic.
2009 saw the peak in residential properties with 26% of all mortgages that were underwater at that time.
Here are some highlights from the Q1 2017 CoreLogic report:
Texas had the highest percentage of homes with positive equity at 98.4 percent, followed by Utah (98.2 percent), Washington (98.2 percent), Hawaii (98.1 percent) and Colorado (98 percent).
On average, homeowner equity increased about $13,400 from Q1 2016 to Q1 2017 (for mortgaged properties). Washington had the highest year-over-year average increase at $37,900, while Alaska experienced a small decline.
Nevada had the highest percentage of homes with negative equity at 12.4 percent, followed by Florida (11.1 percent), Illinois (10.5 percent), New Jersey (10.2 percent) and Connecticut (9.9 percent). These top five states combined account for 32.6 percent of outstanding mortgages in the U.S.
Of the 10 largest metropolitan areas by population, San Francisco-Redwood City-South San Francisco, CA had the highest percentage of mortgaged properties in a positive equity position at 99.4 percent, followed by Denver-Aurora-Lakewood, CO (98.6 percent), Houston-The Woodlands-Sugar Land, TX (98.5 percent), Los Angeles-Long Beach-Glendale, CA (97.3 percent) and Boston, MA (95.6 percent).
Of the same 10 largest metropolitan areas, Miami-Miami Beach-Kendall, FL had the highest percentage of mortgaged properties in negative equity at 15.7 percent, followed by Las Vegas-Henderson-Paradise, NV (14.2 percent), Chicago-Naperville-Arlington Heights, IL (12 percent), Washington-Arlington-Alexandria, DC-VA-MD-WV (8 percent) and New York-Jersey City-White Plains, NY-NJ (5.3 percent).
*Q4 2016 data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.
Dr. Frank Nothaft, chief economist for CoreLogic had issued this statement along with the report;
“One million borrowers achieved positive equity over the last year, which means mortgage risk continues to steadily decline as a result of increasing home prices. Pockets of concern remain with markets such as Miami, Las Vegas and Chicago, which are the top three for negative equity among large metros, with each recording a negative equity share at least twice or more the national average.”
Nothaft concluded, “Homeowner equity increased by over $750 billion during the last year, the largest increase since mid-2014,” said Frank Martell, president and CEO of CoreLogic. “The rising cushion of home equity is one of the main drivers of improved mortgage performance. It also supports consumer balance sheets, spending and the broader economy.”