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Borrower Equity Update: Third Quarter 2017

Negative Equity Share Falls Below 5 Percent in Q3 2017

Molly Boesel    |    Property Valuation

  • National share of homes with negative equity fell to 4.9 percent in Q3 2017.
  • Homeowner equity increased 12 percent from a year ago.
  • Nevada saw the largest improvement in the negative equity share over the past year, falling 5.4 percentage points.

The amount of equity in mortgaged real estate increased by $288 billion in Q3 2017 compared with Q2 2017, and increased by $871 billion between Q3 2016 and Q3 2017 – a year-over-year increase of 12 percent, according to the latest CoreLogic Equity Report. Homeowner equity has more than doubled in five years, increasing by $4.5 trillion from Q3 2012 to Q3 2017[1]. The nationwide negative equity share for Q3 2017 was 4.9 percent of all homes with a mortgage, more than 20 percentage points lower than the peak negative equity share – 26 percent – recorded in Q4 2009.[2]  Over the past 12 months, 712,000 borrowers moved into positive equity.

The improvement in negative equity has been national, with all but two states registering a year-over-year decrease in Q3 2017 (Louisiana and New York saw small increases of 0.1 percentage points and 0.6 percentage points, respectively). Figure 1 shows the 25 states with the largest percentage-point change in the negative equity share from the previous year. Nevada’s 5.4-percentage-point decrease between Q3 2016 and Q3 2017 represented the nation’s largest year-over-year decline, and the drop from a high of 72.7 percent in Q1 2010 to 9 percent in Q3 2017 represented the largest decline from the peak.

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Figure 2 shows the average dollar amount of negative equity and the negative equity share for 10 large Core Based Statistical Areas (CBSAs) in Q3 2017. The average amount of negative equity is inversely related to the negative equity share. For example, in this group of CBSAs, San Francisco has the largest average amount of negative equity, but the negative equity share is only 0.6 percent. Miami has the smallest average amount of negative equity, but has a negative equity share that is nearly three times the national average.

[1] Homeowner equity in this report reflects only mortgaged single-family real estate.

[2] CoreLogic began reporting negative equity in Q3 2009.

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