CoreLogic: Underwater Homeowners Increase in 4Q

Mike Sorohan msorohan@mba.org

March 08, 2019

CoreLogic, Irvine, Calif., said while U.S. homeowners with mortgages saw their equity increase in the fourth quarter, the number of homeowners with negative equity increased for the first time in three years.

The company's quarterly Home Equity Report said U.S. homeowners with mortgages (63 percent of all properties) saw their equity increase by 8.1 percent year over year, representing a gain of nearly $678.4 billion over the past year. Additionally, the average homeowner gained $9,700 in home equity over the past year.

However, the report said from the third quarter to the fourth quarter, mortgaged homes in negative equity increased by 1.6 percent to 2.2 million homes, or 4.2 percent of all mortgaged properties. This represented the first quarterly increase since fourth quarter 2015. Despite that quarter-over-quarter increase, on a year-over-year basis, mortgaged properties in negative equity fell by 14 percent, or by 351,000, from 2.6 million homes (4.9 percent of all mortgaged properties) in the fourth quarter.

The report said while home equity grew in almost every state, western states experienced the most significant annual increases. Nevada homeowners gained an average of $29,400 in home equity, while Hawaii homeowners gained an average of $26,900 and Idaho homeowners gained an average of $24,700. California homeowners experienced the fourth-highest growth with an average increase of $19,600 in home equity (Figure 1).

The CoreLogic forecast suggest 4.5 percent increase in home prices through 2019. "If all homes experience this gain, this would lift about 350,000 homeowners from being underwater and restore positive equity," said CoreLogic Chief Economist Frank Nothaft.

CoreLogic said negative equity peaked at 26 percent of mortgaged residential properties in fourth quarter 2009. The national aggregate value of negative equity was $300.3 billion at the end of the fourth quarter, up by $17.4 billion from $282.9 billion in the third quarter and up year over year by $14.4 billion from $285.9 billion a year ago.

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