CoreLogic, a property information, analytics and data-enabled solutions provider, has released its Homeowner Equity Report (HER) for the second quarter of 2023. The report shows that United States homeowners with mortgages (roughly 63% of all properties) saw home equity decrease by 1.7% year over year, representing a collective loss of $287.6 billion, and an average loss of $8,300 per borrower since the second quarter of 2022.
However, U.S. homeowners with mortgages gained on average $13,900 quarter over quarter, amounting to a collective increase of $806 billion – or a 5.2% gain – in home equity. And while borrowers in the West continued to experience the largest year-over-year equity losses, homeowners in states like Hawaii, California and Washington still have the most accumulated equity due to the pace of appreciation over the past decade.
“While more borrowers are underwater compared with one year ago, they are not necessarily concentrated in markets that have seen the largest price declines, as negative equity also depends on the down payment. Natural disasters and related risks also play a substantial role in home equity changes,” says Selma Hepp, chief economist for CoreLogic.
As of the second quarter of 2023, the quarterly and annual changes in negative equity were:
- Quarterly change: From the first quarter of 2023 to the second quarter of 2023, the total number of mortgaged homes in negative equity decreased by 6%, to 1.11 million homes or 2% of all mortgaged properties.
- Annual change: From the second quarter of 2022 to the second quarter of 2023, the total number of homes in negative equity increased by 4% from 1.06 million homes or 1.9% of all mortgaged properties.
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 second quarter of 2023 book of mortgages, if home prices increase by 5%, 128,000 homes would regain equity; if home prices decline by 5%, 178,000 properties would fall underwater.
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