Data Through Q1 2023
The CoreLogic Homeowner Equity Insights report, is published quarterly with coverage at the national, state and 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 2023.
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 2023
CoreLogic analysis shows U.S. homeowners with mortgages (roughly 63% of all properties*) saw their equity decrease by a total of $108.4 billion since the first quarter of 2022, a loss of 0.7% year over year.
*Homeownership mortgage source: 2016 American Community Survey.
In the first quarter of 2023, the total number of mortgaged residential properties with negative equity was unchanged from the fourth quarter of 2022 , representing 1.2 million homes, or 2.1% of all mortgaged properties. On a year-over-year basis, negative equity rose by 4% to 1.1 million homes, or 2% of all mortgaged properties, in the first quarter of 2023.
Because home equity is affected by home price changes, borrowers with equity positions near (+/- 5%) the negative equity cutoff are most likely to move out of or into negative equity as prices change, respectively. Looking at the first quarter of 2023 book of mortgages, if home prices increase by 5%, 145,000 homes would regain equity; if home prices decline by 5%, 213,000 would fall underwater. The CoreLogic HPI Forecast TM projects that home prices will increase by 4.6% from March 2023 to March 2024.
Home Equity Down Year Over Year for the First Time in Over a Decade but Remains Strong
In the first quarter of 2023, U.S. homeowners with a mortgage lost a small amount of equity year over year for the first time since early 2012, while national combined equity followed suit. As in the fourth quarter of 2022, Western states posted the largest annual home equity losses: Washington (-$74,300), California (-$59,600) and Utah (-$37,700). The equity losses in those states reflect decelerating home prices, with all three posting annual declines in February and March, according to CoreLogic’s Home Price Index.
Despite these declines, home equity remains solid, with the number of underwater properties unchanged since the fourth quarter of 2022. And although some major metro areas saw equity decline on an annual basis, years of rapid appreciation in places like Los Angeles and San Francisco, which have negative equity shares of 0.9%, is keeping homeowners in these metros in good standing.
National Aggregate Value of Negative Equity: Q1 2023
The national aggregate value of negative equity was approximately $336.7 billion at the end of the first quarter of 2023. This is up quarter over quarter by approximately $2.4 billion, or 0.7%, from $334.3 billion in the fourth quarter of 2022 and up year over year by approximately $34.7 billion, or 11.5%, from $302 billion in the first quarter of 20221.
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.
“Home equity trends closely follow home price changes. As a result, while the average amount of equity declined from a year ago, it increased from the fourth quarter of 2022, as monthly home prices growth accelerated in early 2023.
The average U.S. homeowner now has more than $274,000 in equity — up significantly from $182,000 before the pandemic. Also, while homeowners in some areas of the country who bought a property last spring have no equity as a result of price losses, forecasted home price appreciation over the next year should help many borrowers regain some of that lost equity.”
– Selma Hepp, Chief Economist for CoreLogic
National Homeowner Equity
In the first quarter of 2023, the average U.S. homeowner lost approximately $5,400 in equity during the past year.
Hawaii, Florida and Rhode Island experienced the largest average equity gains at $24,900, $24,500 and $23,700 respectively. Thirteen states and one district posted annual equity losses: Arizona, California, Colorado, Idaho, Louisiana, Massachusetts, Minnesota, Montana, Nevada, New York, Oregon, Utah, Washington and Washington, D.C.
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. Los Angeles and San Francisco are the least challenged, with negative equity shares of all mortgages at 0.9%.
Loan-to-Value Ratio (LTV)
This chart shows 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 Intelligence 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 uses public record data as the source of the MDO, which includes more than 50 million first- and second-mortgage liens, and is adjusted for amortization and home equity utilization in order to capture the true level of MDO for each property. 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% of the total U.S. population. The percentage of homeowners with a mortgage is from the 2019 American Community Survey. Data for the previous quarter was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.
CoreLogic HPI Forecasts™ are based on a two-stage, error-correction econometric model that combines the equilibrium home price—as a function of real disposable income per capita—with short-run fluctuations caused by market momentum, mean-reversion, and exogenous economic shocks like changes in the unemployment rate. With a 30-year forecast horizon, CoreLogic HPI Forecasts project CoreLogic HPI levels for two tiers — “Single-Family Combined” (both attached and detached) and “Single-Family Combined Excluding Distressed Sales.” As a companion to the CoreLogic HPI Forecasts, Stress-Testing Scenarios align with Comprehensive Capital Analysis and Review (CCAR) national scenarios to project five years of home prices under baseline, adverse and severely adverse scenarios at state, metropolitan areas and ZIP Code levels. The forecast accuracy represents a 95% statistical confidence interval with a +/- 2% margin of error for the index.
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CoreLogic is a leading global property information, analytics and data-enabled solutions provider. The company’s combined data from public, contributory and proprietary sources includes over 4.5 billion records spanning more than 50 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific. For more information, please visit www.corelogic.com.
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