IRVINE, Calif.--(BUSINESS WIRE)--CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released a new analysis showing that U.S. homeowners with mortgages (roughly 63 percent of all homeowners) saw their equity increase by a total of $783 billion in 2016, an increase of 11.7 percent. Additionally, just over 1 million borrowers moved out of negative equity during 2016, increasing the percentage of homeowners with positive equity to 93.8 percent of all mortgaged properties, or approximately 48 million homes.
In Q4 2016, the total number of mortgaged residential properties with negative equity stood at 3.17 million, or 6.2 percent of all homes with a mortgage. This is a decrease of 2 percent quarter over quarter from 3.23 million homes, or 6.3 percent of all mortgaged properties, in Q3 2016* and a decrease of 25 percent year over year from 4.23 million homes, or 8.4 percent of all mortgaged properties, compared with Q4 2015.
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 home value, an increase in mortgage debt or both.
Negative equity peaked at 26 percent of mortgaged residential properties in Q4 2009 based on CoreLogic equity data analysis, which began in Q3 2009.
The national aggregate value of negative equity was approximately $283 billion at the end of Q4 2016, down quarter over quarter by approximately $700 million, or 0.3 percent, from $283.7 billion in Q3 2016; and down year over year by approximately $26 billion, or 8.4 percent, from $308.9 billion in Q4 2015.
“Average home equity rose by $13,700 for U.S. homeowners during 2016,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The equity build-up has been supported by home-price growth and paydown of principal. The CoreLogic Home Price Index for the U.S. rose 6.3 percent over the year ending December 2016. Further, about one-fourth of all outstanding mortgages have a term of 20 years or less, which amortize more quickly than 30-year loans and contribute to faster equity accumulation.”
“Home equity gains were strongest in faster-appreciating and higher-priced home markets,” said Frank Martell, president and CEO of CoreLogic. “The states with the largest home-price appreciation last year, according to the CoreLogic Home Price Index, were Washington and Oregon at 10.2 percent and 10.3 percent, respectively, with average homeowner equity gains of $31,000 and $27,000, respectively. This is double the pace for the U.S. as a whole. And while statewide home-price appreciation was slower in California at 5.8 percent, the high price of housing there led to California homeowners gaining an average of $26,000 in home equity wealth last year.”
Highlights as of Q4 2016:
- Texas had the highest percentage of homes with positive equity at 98.4 percent, followed by Hawaii (98.1 percent), Alaska (97.9 percent), Colorado (97.9 percent), Oregon (97.9 percent), Utah (97.9 percent) and Washington (97.9 percent).
- On average, homeowner equity increased about $13,700 from Q4 2015 to Q4 2016 (for mortgaged properties). Washington had an average increase of $31,000, while Delaware experienced a small decline.
- Nevada had the highest percentage of homes with negative equity at 13.6 percent, followed by Florida (11.6 percent), Illinois (11.1 percent), Rhode Island (10 percent) and Arizona (9.8 percent). These top five states combined account for 29.7 percent of negative equity in the U.S., but only 16.3 percent of outstanding mortgages.
- Of the 10 largest metropolitan areas by population, San Francisco-Redwood City-South San Francisco, CA had the highest percentage of mortgaged properties in a positive equity position at 99.4 percent, followed by Houston-The Woodlands-Sugar Land, TX (98.5 percent), Denver-Aurora-Lakewood, CO (98.5 percent), Los Angeles-Long Beach-Glendale, CA (97 percent) and Boston, MA (95.3 percent).
- Of the same 10 largest metropolitan areas, Miami-Miami Beach-Kendall, FL had the highest percentage of mortgaged properties with negative equity at 16.1 percent, followed by Las Vegas-Henderson-Paradise, NV (15.5 percent), Chicago-Naperville-Arlington Heights, IL (12.6 percent), Washington-Arlington-Alexandria, DC-VA-MD-WV (8.4 percent) and New York-Jersey City-White Plains, NY-NJ (5.1 percent).
*Q3 2016 data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.
For ongoing housing trends and data, visit the CoreLogic Insights Blog: http://www.corelogic.com/blog.
The amount of equity for each property is determined by comparing the estimated current value of the property against the mortgage debt outstanding (MDO). If the MDO is greater than the estimated value, then the property is determined to be in a negative equity position. If the estimated value is greater than the MDO, then the property is determined to be in a positive equity position. The data is first generated at the property level and aggregated to higher levels of geography. CoreLogic data includes more than 50 million properties with a mortgage, which accounts for more than 95 percent of all mortgages in the U.S. CoreLogic uses public record data as the source of the MDO, which includes both first-mortgage liens and second liens, and is adjusted for amortization and home equity utilization in order to capture the true level of MDO for each property. The calculations are not based on sampling, but rather on the full data set to avoid potential adverse selection due to sampling. The current value of the property is estimated using a suite of proprietary CoreLogic valuation techniques, including valuation models and the CoreLogic Home Price Index (HPI). In August 2016, the CoreLogic HPI was enhanced to include nearly one million additional repeat sales records from proprietary data sources that provide greater coverage in home price changes nationwide. The increased coverage is particularly useful in 14 non-disclosure states. Additionally, a new modeling methodology has been added to the HPI to weight outlier pairs, ensuring increased consistency and reducing month-over-month revisions. The use of the enhanced CoreLogic HPI was implemented with the Q2 2016 Equity report. Only data for mortgaged residential properties that have a current estimated value are included. There are several states or jurisdictions where the public record, current value or mortgage data coverage is thin and have been excluded from the analysis. These instances account for fewer than 5 percent of the total U.S. population.
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CoreLogic (NYSE: CLGX) is a leading global property information, analytics and data-enabled solutions provider. The company's combined data from public, contributory and proprietary sources includes over 4.5 billion records spanning more than 50 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific. For more information, please visit www.corelogic.com.
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