Saturday, September 23, 2023

Homeowners lose equity for 1st time in over a decade: Report

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The typical U.S. homeowner with a mortgage lost about $5,400 in equity in the first quarter of 2023 compared to a year earlier, CoreLogic said.

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The typical homeowner with a mortgage lost $5,400 in equity between the first quarter of 2022 and the first quarter of this year, according to a new report.

That’s the first time homeowners with a mortgage — about 63 percent of all homes — lost equity on a year-over-year basis since early 2012, according to property data firm CoreLogic. The firm released its single-family home price index on Tuesday, which found that home prices were up 2 percent year-over-year in April.

“Home equity trends closely follow home price changes,” CoreLogic chief economist Selma Hepp said. “As a result, while the average amount of equity declined from a year ago, it increased from the fourth quarter of 2022, as monthly home prices growth accelerated in early 2023.”

But home prices were down in some states. The decline was sharpest in Western states, where Washington, California and Utah led the drop in home equity. In total, it amounted to a loss of $108.4 billion in equity compared to the first three months of 2022, CoreLogic said.

Biggest equity declines, Q1 2023 compared to Q1 2022

  • Washington: (-$74,300)
  • California: (-$59,600)
  • Utah: (-$37,700)

The number of homes that are underwater — meaning the borrower owes more than the market rate of the home — was unchanged in the quarter, CoreLogic said. It remains at 1.2 million homes or 2.1 percent of all properties.

Average homeowners have $274,000 in equity, Hepp said. That’s up from $182,000 before the pandemic.

“Also, while homeowners in some areas of the country who bought a property last spring have no equity as a result of price losses, forecasted home price appreciation over the next year should help many borrowers regain some of that lost equity,” Hepp said.

Email Taylor Anderson

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