More Homeowners Seeing Rise in Home Equity

LOS ANGELES COUNTY, CA -- CoreLogic, a provider of consumer and property information, Thursday released what it says was an analysis showing that U.S. homeowners with mortgages -- roughly 63 percent of all homeowners -- saw their equity increase by a total of $227 billion in the third quarter of 2016, a 3.1 percent increase over the second quarter.

Additionally, 384,000 borrowers moved out of negative equity, increasing the percentage of homes with positive equity to 93.7 percent of all mortgaged properties, or approximately 47.9 million homes, CoreLogic said in a statement. Year over year, home equity grew by $726 billion, representing an increase of 10.8 percent in this year's third quarter compared to last year's third quarter.

The total number of mortgaged residential properties with negative equity -- a status popularly known as being under water -- stood at 3.2 million in this year's third quarter, or 6.3 percent of all homes with a mortgage, CoreLogic reported. This is a decrease of 10.7 percent from 3.6 million homes, or 7.1 percent of mortgaged properties, in the second quarter of 2016, and a decrease of 24.1 percent from 4.2 million homes, or 8.4 percent of mortgaged properties, in last year's third quarter.

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The national aggregate value of negative equity was about $282 billion at the end of this year's third quarter, decreasing approximately $2.1 billion, or 0.8 percent, from $284 billion in the second quarter and decreasing about $25 billion, or 8.2 percent, from nearly $307 billion in the third quarter of 2015.

"Home equity rose by $12,500 for the average homeowner over the last four quarters," said CoreLogic Chief Economist Frank Nothaft. "There was wide geographic variation with homeowners in California, Oregon and Washington gaining an average of at least $25,000 in home equity wealth, while owners in Alaska, North Dakota and Connecticut had small declines, on average."

CoreLogic President and CEO Anand Nallathambi added: "Price appreciation is the main ingredient for home equity wealth creation, and home prices rose 5.8 percent in the year ending September 2016 according to the CoreLogic Home Price Index."

"Paydown of principal is the second key component of equity building," he said. "Many homeowners have refinanced into shorter-term loans, such as a 15-year loan, and by doing so, they have significantly fewer mortgage payments and are able to build equity wealth faster."

-- City News Service, photo via Shutterstock