Smaller Home-Equity Gains Reflect Slowing in Price Growth

Borrower Equity Update: Third Quarter 2018

By Molly Boesel Real Estate, Risk Management

  • National share of homes with negative equity for Q3 2018 was 4.1 percent.
  • 81,000 borrowers moved into positive equity from Q3 2017 to Q3 2018.
  • Nevada saw the largest improvement in the negative equity share over the past year, falling 4.3 percentage points.

The amount of equity in mortgaged real estate increased by about $775 billion in Q3 2018 from Q3 2017, an annual increase of 9.4 percent, according to the latest CoreLogic Equity Report. The third quarter’s home equity gain was lower than the nearly $1 trillion dollar year-over-year gain in Q2 2018, which reflects slowing price growth.

The nationwide negative equity share for Q3 2018 was 4.1 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.[1]  Over the past 12 months, 81,000 borrowers moved into positive equity.

25 States With Largest Year Over Year

Figure 1 shows the 25 states with the largest percentage-point decreases in the negative equity share from the previous year. Nevada’s 4.3-percentage-point decrease in negative equity between Q3 2017 and Q3 2018 represented the nation’s largest year-over-year decline, and the drop from a high of 72.7 percent in Q1 2010 to 4.7 percent in Q3 2018 represented the largest decline from the peak.

Average Amount of Negative Equity

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 2018. 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 of 11.2 percent, which is nearly three times the national rate.

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

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