Years of Home Price Growth Drives Negative Equity to New Lows

Second Quarter 2019 Equity Gains Were Strongest
In The West

By Molly Boesel Housing Affordability, Real Estate


U.S. home prices have been increasing for over eight years, leading to large increases in home equity and driving down the share of homeowners that have negative equity – or are underwater. At the end of the second quarter of 2019 only 3.8% of all mortgaged homes were underwater[1]. That’s the lowest negative equity share since CoreLogic started tracking the number in 2009. And it’s a far cry from the peak negative share of 26% recorded in the fourth quarter of 2009. (Figure 1)

Figure 1

On the flip side, equity in real estate has increased to an all-time high. Since the second quarter of 2018, the average borrower in the U.S. gained about $5,000 in home equity. Home equity will continue to grow as the CoreLogic Home Price Index forecast calls for continues gains in prices.

Home equity has risen in 47 states and the District of Columbia. Growth was particularly strong in the western half of the country, where all three states with the largest gains are located. Idaho gained an average of $22,000 per borrower, while Wyoming gained $20,000 and Nevada $17,000. (Figure 2)

Figure 2

Only three states showed decreases in borrower equity over the past year: Connecticut, Delaware and North Dakota, with the first two of those states also showing a corresponding decline in average home prices.

During the recovery from the Great Recession, home price gains and negative equity declines varied significantly across the country. While the U.S. saw a 22 percentage-point drop in negative equity share, seven states saw even bigger decreases. Nevada saw the largest improvement, dropping from a negative equity share of 72% in the first quarter of 2010 to just 4% in the second quarter of 2019. (Figure 3)

Figure 3

Borrower equity rose to an all-time high in the first half of 2019 and has more than doubled since the start of the housing recovery. We can expect this, combined with low interest rates, to support spending on home improvements and possibly improve the balance sheets of households who take out home equity loans to consolidate their debt.

[1] CoreLogic Home Equity Report:

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