Home Equity Increases, Providing Source of Wealth for Home Improvements

Borrower Equity Update: Third Quarter 2019

By Molly Boesel Housing Policy, Real Estate

  • Borrower equity increased by $457 billion in the third quarter of 2019 compared with a year earlier.
  • National share of homes with negative equity was 3.7% for the third quarter of 2019.

The amount of equity in mortgaged real estate increased by $457 billion in the third quarter of 2019 from the third quarter of 2018, an annual increase of 5.1%, according to the latest CoreLogic Equity Report. Borrower equity hit a new high in the third quarter of 2019, and borrowers have gained $6 trillion in equity since the end of 2011 when equity stopped declining. During this same time period, homeowners have been staying in their homes longer, preferring to make remodeling updates as their home ages. The rise in home equity provides a source of wealth that owners may be able to tap to finance their home improvements.

The nationwide negative equity share for the third quarter of 2019 was 3.7% of all homes with a mortgage, the lowest share of homes with negative equity since CoreLogic started tracking it in the third quarter of 2009.  The number of underwater properties decreased by 210,000 from the third quarter of 2018 to the third quarter of 2019.

Ten States with the Largest Negative Equity Shares

Figure 1 shows the ten states with the largest negative equity share in the third quarter of 2019. Louisiana stands apart with 10.1% of mortgages with negative equity – more than twice the national average. Connecticut (7.4%) and Illinois (7%) rounded out the top three states with the highest negative equity shares. States with high negative equity shares have experienced low home price appreciation. While Florida makes the top ten list for negative equity share, that state saw a large year-over-year decline in negative equity share, falling from 6.6% in the third quarter of 2018 to 5.3% in the third quarter of 2019.

Average Amount of Negative Equity by CBSA

Figure 2 shows the average dollar amount of negative equity and the negative equity share for 10 large metropolitan areas in the third quarter of 2019. 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%. Miami has the smallest average amount of negative equity, but has a negative equity share of 9.1%, which is more than double the national rate.

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