Collective home equity grows to $3.6 trillion

“For many households, home equity is the only source of wealth creation,” said Selma Hepp, interim lead for CoreLogic’s office of chief economist. “As a result, recent record gains in equity and record declines in loan-to-value ratios will provide many owners with a financial buffer in case economic conditions worsen. In addition, record equity continues to provide fuel for housing demand, particularly if households are relocating to more affordable areas.”

Negative equity declined by 7% to one million mortgaged homes, or 1.8% of all mortgaged properties, in the second quarter. Year over year, negative equity was down 18% to 1.3 million homes, or 2.3% of all mortgaged properties, were in negative equity.

“Because home equity is affected by home price changes, borrowers with equity positions near (+/- 5%) the negative equity cutoff are most likely to move out of or into negative equity as prices change, respectively,” CoreLogic said. “Looking at the second quarter of 2022 book of mortgages, if home prices increase by 5%, 116,000 homes would regain equity; if home prices decline by 5%, 148,000 properties would fall underwater.”