WRE NEWS December 10, 2024
Buyer
US homeowners with mortgages – which account for roughly 62% of all properties – saw home equity increase by $425 billion during the third quarter, an uptick of 2.5% year-over-year, according to new data from CoreLogic. By the end of the third quarter, total net homeowner equity was more than $17.5 trillion.
However, CoreLogic also noted that the share of negative equity rose in the on a quarterly basis for the first time since the fourth quarter of 2022. In the third quarter, the number of residential properties that fell into negative equity increased by 30,000 homes or 1.8%. Nearly 1 million residential homeowners are now contending with negative equity.
CoreLogic also pointed out that while average third quarter equity gains were $5,700 year-over-year, it was significantly lower than the second quarter’s annual equity gains of $25,400. The rate of equity growth dropped from 8% from the second quarter to 2.5% in the third quarter. Three states that were popular work-from-home markets during the pandemic – Hawaii, Colorado, and Idaho – recorded the greatest home equity declines during the third quarter, which CoreLogic attributed to the 2023 wildfire in Maui.
“Nevertheless, Hawaiian homeowners still rank highest for homeowner equity, with equity averaging $700,000,” said Dr. Selma Hepp, CoreLogic chief economist. “Nationally, average homeowner equity remains near a historical peak at over $311,000. Still, recent devastating weather events underscore the importance of maintaining that equity, particularly for households for which this is the only source of wealth.”
Hepp added, “As home prices flattened in the third quarter, home equity gains also slowed, even declined in some regions of the country. While home equity closely depends on home price changes, equity losses are also tied to natural disaster events since households can lose a lot of their equity following a catastrophe, particularly if not property insured. As a result, following Maui’s 2023 devastating wildfire, Hawaii now tops the list with largest decline in home equity.”
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