Due to rising home prices, U.S. homeowners with mortgages (about 63% of all homeowners) saw their total combined equity increase 12.2% – or about $908.4 billion – in 2017 compared with 2016, according to CoreLogic’s quarterly Home Equity Report.
On average, a homeowner gained more than $15,000 in home equity between the fourth quarter of 2016 and the fourth quarter of 2017.
Of course, the rate of increase depends on where a property is located: Washington homeowners gained an average of approximately $40,000 in home equity, and California homeowners gained an average of approximately $44,000, according to the report.
Still, roughly 4.9% of homes with a mortgage – or about 2.5 million mortgaged residential properties – were in negative equity in the fourth quarter of 2017. That’s down only 1% compared with a year earlier.
“Home-price growth has been the primary driver of home-equity wealth creation,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “The CoreLogic Home Price Index grew 6.2 percent during 2017, the largest calendar-year increase since 2013. Likewise, the average growth in home equity was more than $15,000 during 2017, the most in four years. Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to U.S. consumption spending over the next two to three years.”
“There are wide disparities in home-equity gains by geographic area, with higher-priced, capacity constrained markets along the East and West Coasts registering the largest increases,” adds Frank Martell, president and CEO of CoreLogic. “The average homeowner in California and Washington had a wealth gain of about $40,000, reflecting the high price of homes in California and the rapid appreciation in Washington. In contrast, the average owner in Louisiana had little change in their housing wealth during 2017, given much lower prices and modest price growth.”