Homeowner Equity Insights
Data Through Q1 2020
The CoreLogic Homeowner Equity Insights report, is published quarterly with coverage at the national, state and Core Based Statistical Area (CBSA)/Metro level and includes negative equity share and average equity gains. The report features an interactive view of the data using digital maps to examine CoreLogic homeowner equity analysis through the first quarter of 2020.
Negative equity, often referred to as being “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in home value, an increase in mortgage debt or both.
This data only includes properties with a mortgage. Non-mortgaged properties (that are owned outright) are not included.
Homeowner Equity Q1 2020
CoreLogic analysis shows U.S. homeowners with mortgages (roughly 63% of all properties*) have seen their equity increase by a total of nearly $590 billion since the first quarter of 2019, an increase of 6.5%, year over year.
*Homeownership mortgage source: 2016 American Community Survey.
Negative Equity Falls
In the first quarter of 2020, the total number of mortgaged residential properties with negative equity decreased by 3.1% from the fourth quarter 2019 to 1.8 million homes, or 3.4% of all mortgaged properties. On a year-over-year basis, negative equity fell by 16% from 2.2 million homes, or 4.1% of all mortgaged properties, in the fourth quarter of 2019.
In the latter half of the first quarter of 2020, the coronavirus (COVID-19) began to spread across the country, with immediate economic impact not fully realized until the end of March. As the pandemic continued to unfold and shelter-in-place orders were extended, unemployment reached double digits within a few short weeks and left many homeowners scrambling to cover mortgage payments. However, home prices continued to rise, which added to borrower equity through March.
"The pandemic recession will likely lead to price declines in many areas during the next year and weaken home equity gains. However, price declines will be far less than those experienced during the Great Recession, when the national CoreLogic Home Price Index fell 33% peak-to-trough. Our latest forecast shows the national index to have a peak-to-trough decline of 1.5%."
Chief Economist for CoreLogic
National Aggregate Value of Negative Equity: Q1 2020
The national aggregate value of negative equity was approximately $284 billion at the end of the first quarter of 2020. This is down quarter over quarter by approximately $1.9 billion, or 0.7%, from $286 billion in the fourth quarter of 2019 and down year over year by approximately $22.6 billion, or 7.4%, from $307 billion in the first quarter of 2019.
Negative equity peaked at 26% of mortgaged residential properties in the fourth quarter of 2009, based on the CoreLogic equity data analysis which began in the third quarter of 2009.
Homeowner Equity 10-Year Retrospect
Over the past 10 years, the equity position of homeowners has positively changed as a result of more than eight years of rising home prices. As the economy climbed out of the recession in the first quarter of 2010, 25.9% or 12.1 million homes were still underwater, compared to the first quarter of 2020 when the negative equity share was at 3.4%, or 1.8 million properties. Borrowers have seen an aggregate increase of $6.2 trillion in home equity since the first quarter of 2010 and the average homeowner has gained about $106,100 in equity. Every state experienced a large reduction in the share of homes in negative equity, with Nevada posting the most significant drop in negative equity share, falling 70 percentage points between the first quarter of 2010 to the first quarter of 2020.
"Many homeowners will experience a recession during their lifetime, and it is reasonable to compare the current recession to those in the past. But the comparison is not apples to apples — every recession is different. Primary drivers of the Great Recession were an overbuilt housing stock, risky mortgages and the collapse of home prices, creating a massive increase in negative equity that proved difficult to recover from. Today’s housing environment has low vacancy and delinquency rates and a large home equity cushion. While the CoreLogic HPI forecasts a decline in home prices in the coming year, we can also expect the majority of homeowners to remain above water."
President and CEO of CoreLogic
National Homeowner Equity
In the first quarter of 2020, the average homeowner gained approximately $9,600 in equity during the past year. Idaho had the highest year-over-year average increase at $24,400.
10 Select Metros Change
CoreLogic provides homeowner equity data at the metropolitan level. In this graphic, 10 of the largest cities, by housing stock, are depicted.
Negative equity has seen a recent decrease across the country. San Francisco-Redwood City-South San Francisco, CA, is the least challenged, with Negative Equity Share of all mortgages at 0.7%.
Loan-to-Value Ratio (LTV)
The graph represents National Homeowner Equity Distribution across multiple LTV Segments.
CoreLogic began reporting homeowner equity data in the first quarter of 2010; at that time, the equity picture for homeowners was rather bleak in the United States. Since then, many homes have regained equity and the outstanding balance on the majority of mortgages in this country are now equal to or in a positive position when compared to their loan balance.
CoreLogic will continue to report on homeowner equity as it continues to adjust in communities and states across the country. To learn more about homeowner equity, visit the CoreLogic Insights page on www.corelogic.com.
The amount of equity for each property is determined by comparing the estimated current value of the property against the mortgage debt outstanding (MDO). If the MDO is greater than the estimated value, then the property is determined to be in a negative equity position. If the estimated value is greater than the MDO, then the property is determined to be in a positive equity position. The data is first generated at the property level and aggregated to higher levels of geography. CoreLogic data includes more than 50 million properties with a mortgage, which accounts for more than 95 percent of all mortgages in the U.S. CoreLogic uses public record data as the source of the MDO, which includes both first-mortgage liens and second liens, and is adjusted for amortization and home equity utilization in order to capture the true level of MDO for each property. The calculations are not based on sampling, but rather on the full data set to avoid potential adverse selection due to sampling. The current value of the property is estimated using a suite of proprietary CoreLogic valuation techniques, including valuation models and the CoreLogic Home Price Index (HPI). In August 2016, the CoreLogic HPI was enhanced to include nearly one million additional repeat sales records from proprietary data sources that provide greater coverage in home price changes nationwide. The increased coverage is particularly useful in 14 non-disclosure states. Additionally, a new modeling methodology has been added to the HPI to weight outlier pairs, ensuring increased consistency and reducing month-over-month revisions. The use of the enhanced CoreLogic HPI was implemented with the Q2 2016 Equity report. Only data for mortgaged residential properties that have a current estimated value are included. There are several states or jurisdictions where the public record, current value or mortgage data coverage is thin and have been excluded from the analysis. These instances account for fewer than 5 percent of the total U.S. population.
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