Data Through Q4 2021
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 fourth quarter of 2021.
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 Q4 2021
CoreLogic analysis shows U.S. homeowners with mortgages (roughly 63% of all properties*) have seen their equity increase by a total of over $3.2 trillion since the fourth quarter of 2020, an increase of 29.3% year over year.
*Homeownership mortgage source: 2016 American Community Survey.
Negative Equity Falls
In the fourth quarter of 2021, the total number of mortgaged residential properties with negative equity decreased by 3% from the third quarter of 2021 to 1.1 million homes, or 2.1% of all mortgaged properties. On a year-over-year basis, negative equity fell by 24.9% from 1.5 million homes, or 2.8% of all mortgaged properties, in the fourth quarter of 2020.
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 fourth quarter of 2021 book of mortgages, if home prices increase by 5%, 141,000 homes would regain equity; if home prices decline by 5%, 183,000 would fall underwater. The CoreLogic HPI Forecast TM projects home prices will increase 5% from December 2021 to December 2022.
U.S. home prices rose 18% year over year in the fourth quarter of 2021, up from the 8% annual gain recorded in the fourth quarter of 2020. The appreciation helped push the national negative equity figure to the lowest in over a dozen years, with just 1.1 million homeowners underwater on their mortgages. Western state homeowners saw the biggest equity gains by dollar value, led by Hawaii, California and Washington. Year-over-year price appreciation increased by 19.1% in January 2022 according to CoreLogic’s latest Home Price Index, though growth is projected to eventually slow over the next 12 months.
National Aggregate Value of Negative Equity: Q4 2021
The national aggregate value of negative equity was approximately $287.5 billion at the end of the fourth quarter of 2021. This is up quarter over quarter by approximately $9.6 billion, or 3.5%, from $277.9 billion in the third quarter of 2021 and up year over year by approximately $5.1 billion, or 1.8%, from $282.4 billion in the fourth quarter of 2020.
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 prices rose 18% during 2021 in the CoreLogic Home Price Index, the largest annual gain recorded in its 45-year history, generating a big increase in home equity wealth. For low- and moderate-income homeowners, home equity has historically been a major source of wealth”
-Dr. Frank Nothaft
Chief Economist for CoreLogic
National Homeowner Equity
In the fourth quarter of 2021, the average homeowner gained approximately $55,300 in equity during the past year.
Hawaii, California, and Washington experienced the largest average equity gains at $128,300, $117,000 and $95,500 respectively. Meanwhile, North Dakota and D.C. experienced the lowest average equity gain in the fourth quarter of 2021 at $16,800 and $11,100 respectively.
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 0.6%.
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 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 visitwww.corelogic.com.
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