Homeowners with mortgages (which account for roughly 63% of all properties) saw equity increase by 7.3% year-over-year, representing a collective gain of $1 trillion since Q4 2021, according to a new report from CoreLogic.
CoreLogic’s Homeowner Equity Report for Q4 2022 found that as home price growth continued its slow, steady decline in the final months of 2022, home equity trends naturally followed suit. The average borrower earned about $14,300 in equity YoY, compared with the $63,100 gain seen in Q1 2022.
- Four Western states and one district posted annual home equity decreases: Idaho (-$21,400), Washington (-$18,900), California (-$8,500), Utah (-$4,600) and Washington, D.C. (-$8,300).
- This partially mirrors trends recorded in CoreLogic’s latest Home Price Index (HPI), which found that Idaho, Washington and Washington, D.C. saw home price growth decline slightly year over year in January 2023.
- On the flip side of the coin, Florida homeowners saw the highest annual equity growth in the fourth quarter, at $49,000. Florida has posted the largest year-over-year home price gains in the country for the past year, according to HPI data, with prices up by 13.4% in January.
- Quarterly change in negative equity: the total number of mortgaged homes increased by 6%, to 1.2 million homes or 2.1% of all mortgaged properties.
- Annual change in negative equity: The total number of homes declined by 2% to 1.2 million homes or 2.2% of all mortgaged properties.
- Because home equity is affected by home price changes, borrowers with equity positions near (+/- 5%), the negative equity cutoff, are most likely to move out of or into negative equity as prices change, respectively. Looking at the Q4 2022 book of mortgages, if home prices increase by 5%, 145,000 homes would regain equity; if home prices decline by 5%, 215,000 properties would fall underwater.
“While equity gains contracted in late 2022 due to home price declines in some regions, U.S. homeowners on average still have about $270,000 in equity more than they had at the onset of the pandemic,” said Selma Hepp, chief economist at CoreLogic. “Even in Idaho, where borrowers were the most vulnerable to losses, the typical homeowner with a mortgage still has about $250,000 in remaining home equity.”
“Nevertheless, with 66,000 borrowers entering negative equity in the fourth quarter, the total number of underwater properties is now approaching levels seen at the end of 2021, which was the lowest since the Great Recession,” Hepp said. “The new hot spots for equity declines are largely markets that have seen the most significant home price deceleration, including Boise, Idaho; the San Francisco Bay Area; cities in Utah; Phoenix and Austin, Texas.”
For the full report, click here.