Thanks to rising home prices, more than 1 million borrowers moved out of negative equity during 2016, increasing the percentage of homeowners with positive equity to 93.8% of all mortgaged properties, according to CoreLogic.
That means approximately 48 million homes in the U.S. are now in positive equity.
The firm’s data shows that U.S. homeowners with mortgages (roughly 63% of all homeowners) saw their equity increase by a total of $783 billion in 2016 – an increase of 11.7%.
In the fourth quarter, the total number of mortgaged residential properties with negative equity stood at 3.17 million, or 6.2% of all homes with a mortgage. This is a decrease of 2% compared with 3.23 million homes, or 6.3% of all mortgaged properties, in the third quarter.
Year over year, the total number of mortgaged residential properties with negative equity decreased 25%.
Negative equity peaked at 26% of mortgaged residential properties in the fourth quarter of 2009.
“Average home equity rose by $13,700 for U.S. homeowners during 2016,” says Frank Nothaft, chief economist for CoreLogic.
He points out that, currently, “about one-fourth of all outstanding mortgages have a term of 20 years or less, which amortize more quickly than 30-year loans and contribute to faster equity accumulation.”
“Home equity gains were strongest in faster-appreciating and higher-priced home markets,” adds Frank Martell, president and CEO of CoreLogic. “The states with the largest home price appreciation last year were Washington and Oregon, at 10.2 percent and 10.3 percent, respectively, with average homeowner equity gains of $31,000 and $27,000, respectively. This is double the pace for the U.S. as a whole. And while statewide home price appreciation was slower in California, at 5.8 percent, the high price of housing there led to California homeowners gaining an average of $26,000 in home equity wealth last year.”
As of the end of the fourth quarter, Texas had the highest percentage of homes with positive equity, at 98.4%, followed by Hawaii (98.1%), Alaska (97.9%), Colorado (97.9%), Oregon (97.9%), Utah (97.9%) and Washington (97.9%).