Borrower Equity Rebounds $5.5 Trillion From the Bottom Hit Seven Years Ago

Borrower Equity Update: Fourth Quarter 2018

By Molly Boesel Real Estate, Risk Management

  • National share of homes with negative equity for Q4 2018 was 4.2 percent.
  • The number of mortgaged properties in negative equity fell 351,000 from Q4 2017 to Q4 2018.
  • Nevada saw the largest improvement in the negative equity share over the past year, falling 3.7 percentage points.

The amount of equity in mortgaged real estate increased by about $678 billion in Q4 2018 from Q4 2017, an annual increase of 8.1 percent, according to the latest CoreLogic Equity Report. The Fourth quarter’s annual increase in home equity marked the lowest such gain in equity since Q2 2016, which reflects slowing price growth. Despite the lower growth rate, borrower equity hit a new high in Q4 2018, and borrowers have gained $5.5 trillion in equity in the last seven years.

The nationwide negative equity share for Q4 2018 was 4.2 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]  The number of underwater properties decreased by 351,000 from Q4 2017 to Q4 2018.

States with the 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 3.7-percentage-point decrease in negative equity between Q4 2017 and Q4 2018 represented the nation’s largest year-over-year decline, and the drop from a high of 72.7 percent in Q1 2010 to 4.3 percent in Q4 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 Q4 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 0.7 percent. Miami has the smallest average amount of negative equity, but has a negative equity share of 10.4 percent, which is nearly three times the national rate.

[1] CoreLogic began reporting negative equity in Q4 2009.

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