As home prices rise, owners are able to benefit from growing home equity. The average homeowner with a mortgage gained $7,300 in equity by the last quarter of 2019, according to a new report released by property analytics provider CoreLogic on Thursday.
Such a rise represents roughly a 5.4 percent, or a collective $489 billion, increase from the same quarter in 2018. The trend is caused in no small part due to the dramatic growth in home prices and dearth of homes on the market that has been going on for the last few years — the average American home price grew by 4 percent in January and is expected to increase by another 5.4 percent by 2021.
Homes in negative equity, or a situation in which a home is worth less than what its owners owe for their mortgage, fell by 4.8 percent in the same time period. Year-over-year, the numbers dropped even more dramatically; the amount of underwater homes decreased by 15 percent, or 330,000 homes. Currently, only 3.5 percent of all mortgaged homes are in negative equity, compared to 26 percent at the height of the 2008-2009 recession.
“The number of underwater homes in the United States has fallen to the lowest level since the Great Recession,” Frank Martell, president and CEO of CoreLogic, said in a prepared statement. “In general, Western states and those in the mid-Atlantic region are registering strong gains, compared to states in the Northeast and upper Midwest.”
Regionally, western states saw even more dramatic gains in average equity. Idaho, Wyoming and Arizona saw their average gains at $18,700, $17,900 and $14,800, respectively.
“With unprecedented low rates and constrained supply, the housing market should continue to do well,” Martell said. “Viewed against the backdrop of the recent stock market volatility, steady gains in home equity are a welcome source of stability.”