Western Homeowners Still Experiencing Equity Losses: CoreLogic

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Western Homeowners Still Experiencing Equity Losses: CoreLogic

Sep 19, 2023 | News | 0 comments

In the U.S., the CoreLogic Homeowner Equity Insights report reveals a 6% drop in mortgaged homes with negative equity in Q2, with the Northeast showing improvement while Western homeowners continue to grapple with this issue. Negative equity occurs when mortgage debt surpasses home values.

In the second quarter, only 2% of mortgaged homeowners, equivalent to 1.1 million residences, faced negative equity. Yearly, negative equity increased by 4%, affecting 1.1 million homes, or 1.9% of all mortgaged properties. Since Q2 2022 peak, homeowners’ equity declined by $287.6 billion, a 1.7% annual loss.

Selma Hepp, the chief economist at CoreLogic, mentioned that although U.S. home equity has dipped from its Q2 2022 high, homeowners are currently in a more favorable situation compared to six months ago when prices hit their lowest point.

The 5% general rise in home prices since February translates to an almost $14,000 gain for the average U.S. homeowner compared to the prior quarter. This is a substantial improvement for those who purchased homes at the peak of prices in the spring of 2022.

Hepp also highlighted how factors like down payments and natural disasters can negatively affect home equity.

During Q2 2023, the typical U.S. homeowner saw their equity decrease by around $8,300 in the past year. New Jersey, New Hampshire, Connecticut, and Rhode Island had the most significant yearly equity gains, exceeding $20,000. Conversely, 16 states and Washington, D.C., reported annual equity losses, with values declining in various regions.

CoreLogic also supplies homeowner equity statistics for metropolitan areas. In the second quarter, they reported that 0.8% of mortgaged properties in the San Francisco and Los Angeles metros had negative equity. In San Francisco, the average yearly equity loss amounted to $139,000, while Los Angeles showed a negative $46,000.

From one quarter to the next, U.S. homeowners with mortgages collectively added an average of $13,900, amassing a total increase of $806 billion (a 5.2% gain) in home equity. In the West, borrowers continued to experience substantial yearly equity losses. Nonetheless, states like Hawaii, California, and Washington maintained significant accumulated equity due to a decade of robust appreciation.