Homeowners with mortgages have seen their equity increase 12.2 percent year over year, according to CoreLogic’s newly released Home Equity Report. Homeowners gained more than $15,000 in home equity between the fourth quarter of 2016 and the fourth quarter of 2017—the highest growth in home equity in four years, according to the report. Western states saw the largest increases.
“Home-price growth has been the primary driver of home-equity wealth creation,” says Frank Nothaft, chief economist for CoreLogic. “Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to U.S. consumption spending over the next two to three years.”
Meanwhile, the number of borrowers who are in a negative equity territory is decreasing. The total number of mortgaged homes in negative equity—those who owe more on their mortgage than their home is currently worth—dropped to 2.5 million homes, or 4.9 percent of all mortgaged properties in the fourth quarter of 2017.
“There are wide disparities in home-equity gains by geographic area, with higher-priced, capacity constrained markets along the East and West Coasts registering the largest increases,” says Frank Martell, president and CEO of CoreLogic. “The average homeowner in California and Washington had a wealth gain of about $40,000, reflecting the high price of homes in California and the rapid appreciation in Washington. In contrast, the average owner in Louisiana had little change in their housing wealth during 2017, given much lower prices and modest price growth.”