Home equity gains help more borrowers get their head above water

Mortgage

While home equity gains realized their lowest increase since 2012, the first quarter’s rate still allowed more borrowers to get their head above water as the equity total compiled $5.6 trillion in seven years, according to CoreLogic.

CoreLogic’s Home Equity report showed homeowners with mortgages — about 63% of all properties — saw an equity increase of 5.6% in the opening quarter of 2019 to a total of $482.7 billion, up from the first quarter of 2018. This helped drop the share of underwater mortgages.

CoreLogic

Negative equity declined 11% year-over-year to 2.2 million homes from 2.5 million, accounting for 4.1% of mortgages. The total number of underwater properties held steady from the fourth quarter of 2018.

“The country continues to experience record economic expansion as illustrated by these increases in home equity,” Frank Martell, president and CEO of CoreLogic, said in a press release. “We expect home equity to continue increasing nationally in 2019, albeit at a slower pace than in recent years.”

The average homeowner gained $6,438 worth of year-over-year equity from a year ago — a figure dropping precipitously. The first quarter of 2019 marked the smallest annual increase in the past 10 quarters. Some industry experts see this diminishing growth as an impediment for home renovations.

“A moderation in home-price growth has reduced the gains in home-equity wealth and will likely slow the growth in home-improvement spending in the coming year,” said Frank Nothaft, chief economist for CoreLogic. “For larger remodeling projects, homeowners often choose to cash-out some of their home equity through a first-lien refinance or placement of a second lien.”

Home equity grew in 48 of the 50 states. Similar to the previous quarter, the largest increases came out in the Mountain West. Nevada’s homeowner equity led the way by adding an average of $21,030 year-over-year. Idaho followed with annual gains of $20,732. Wyoming came third with $20,308 and was the only other state to reach the $20,000 plateau. North Dakota’s loss of $16,350 and Connecticut’s drop of $1,336 per mortgaged property put them as the only two states with decreases.

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