U.S. home equity continued to rise in the third quarter, increasing by $425 billion, or 2.5%, to a record $17.5 trillion, according to CoreLogic’s Homeowner Equity Report (HER).
Driving the increase was rising home prices.
However, there are certain markets in the U.S. where home price appreciation is slowing dramatically. As a result, the share of residential properties that fell into negative equity increased by 30,000 homes or 1.8%.
While almost 1 million residential homeowners are now contending with negative equity on their homes, many others are benefitting from the continued rise in home prices and the resulting boost in equity, CoreLogic says.
Still, the rate of equity gains has slowed along with appreciation: While average equity gains were $5,700 during the past year, this is far less than the annual jump seen last quarter, when annual equity gains hit $25,400.
States in the Northeast, where equity gains are strongest, also saw the most home price growth. Prices in New Jersey and Rhode Island reached new highs in October, with these states claiming the top two spots for year-over-year price gains, rising 8.1% and 7.5%, respectively.
Meanwhile, Hawaii, Colorado, and Idaho, which were former work-from-home hotspots that attracted people with their picturesque landscapes, saw home equity drop this quarter. Hawaii saw the most significant dip in home equity with an average loss of $34,000.
“As home prices flattened in the third quarter, home equity gains also slowed, even declined in some regions of the country,” says Selma Hepp, chief economist for CoreLogic, in the report. “While home equity closely depends on home price changes, equity losses are also tied to natural disaster events since households can lose a lot of their equity following a catastrophe, particularly if not property insured. As a result, following Maui’s 2023 devastating wildfire, Hawaii now tops the list with largest decline in home equity.
“Nevertheless, Hawaiian homeowners still rank highest for homeowner equity, with equity averaging $700,000,” Hepp adds. “Nationally, average homeowner equity remains near a historical peak at over $311,000. Still, recent devastating weather events underscore the importance of maintaining that equity, particularly for households for which this is the only source of wealth.”
Photo: Roger Starnes Sr