Due to rising home prices, the total number of U.S. properties in negative equity continued to shrink in the third quarter.
“Ten years ago, during the depths of the Great Recession, more than 11 million homeowners had negative equity or 25 percent of mortgaged homes,” says Frank Nothaft, chief economist for CoreLogic, in the firm’s most recent home equity report. “After more than eight years of rising home prices and employment growth, underwater owners have been slashed to just two million, or less than four percent of mortgaged homes.”
During the third quarter, roughly 78,000 properties were lifted out of negative equity, according to the firm’s data.
And during the past year, about 210,000 properties have been lifted out of negative equity.
As of the end of the quarter, roughly 3.7% of all mortgaged U.S. properties were “underwater” – down from 4.1% in the third quarter of 2018.
On average, U.S. homeowners with mortgages – which account for roughly 64% of all properties – have seen their equity increase by 5.1% year over year, representing a gain of nearly $457 billion since the third quarter of 2018.
The average homeowner gained $5,300 in home equity between the third quarter of 2018 and the third quarter of 2019.
States that saw the largest gains include Idaho, where homeowners gained an average of $25,800; Wyoming, where homeowners gained an average of $24,000; Utah, where homeowners gained an average of $21,000; and Montana, where homeowners gained an average of $17,800.
From the second quarter to the third quarter, the total number of mortgaged homes in negative equity decreased by about 2 million.
The national aggregate value of negative equity, as of the end of the quarter, was approximately $301 billion – down by approximately $2.4 billion, or 0.8%, from $303.4 billion in the second quarter, and up year over year by approximately $17.1 billion, or 6%, from $283.9 billion in the third quarter of 2018.
“The negative equity share continues to decline thanks to rising home prices across the nation,” says Frank Martell, president and CEO of CoreLogic. “According to the latest [CoreLogic home price index] report, home prices increased an average of 3.5 percent year over year in October. Out of all 50 states, homeowners in Idaho experienced the largest annual home price increase at 10.9 percent, while they also gained the most home equity, averaging $25,800.”