U.S. Homeowners Enjoyed an Average Annual Increase of $5,300 of Equity in Q3

According to CoreLogic's newly released Home Equity Report for the third quarter of 2019, 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 of 2019 to the third quarter of 2019, the total number of mortgaged homes in negative equity decreased by 4% to 2 million homes or 3.7% of all mortgaged properties. The number of mortgaged properties in negative equity during the third quarter of 2019 fell by 10%, or 220,000 homes, compared to the third quarter of 2018, when 2.2 million homes, or 4.1% of all mortgaged properties, were in negative equity.

"Ten years ago, during the depths of the Great Recession, more than 11 million homeowners had negative equity or 25% of mortgaged homes," said Dr. Frank Nothaft, chief economist for CoreLogic.  "After more than eight years of rising home prices and employment growth, underwater owners have been slashed to just 2 million, or less than 4% of mortgaged homes."

Negative equity, often referred to as being underwater or upside down, applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in a home's value, an increase in mortgage debt or both. Negative equity peaked at 26% of mortgaged residential properties in the fourth quarter of 2009, based on the CoreLogic equity data analysis, which began in the third quarter of 2009.

The national aggregate value of negative equity was approximately $301 billion at the end of the third quarter of 2019. This is down quarter over quarter by approximately $2.4 billion, or 0.8%, from $303.4 billion in the second quarter of 2019 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," said Frank Martell, president and CEO of CoreLogic. "According to the latest HPI report, home prices increased an average of 3.5% year over year in October 2019. Out of all 50 states, homeowners in Idaho experienced the largest annual home price increase at 10.9%, while they also gained the most home equity, averaging $25,800."