A new report from CoreLogic examines how housing has played a part in what is now the longest economic expansion on record. According to a CoreLogic special report, titled “The Role of Housing in the Longest Economic Expansion,” in July 2019, the United States’ economic expansion reached 121 months. The economy has continued to grow since the recession ended in 2009, and with housing comprising approximately 15% of GDP since 2010, the real estate market is an important indicator of economic health.
“During the last nine years, the expansion has created more than 20 million jobs, raised family incomes and rebuilt consumer confidence,” said CoreLogic Chief Economist Frank Nothaft. “The longest stretch of mortgage rates below 5% in more than 60 years has supplemented these factors. These economic forces have driven a recovery in home sales, construction, prices and home equity wealth.”
In Q1 2019, the total percent of homes underwater went from 25.9% in the first quarter of 2010 to 4.1% in the first quarter of 2019. Meanwhile, home equity reached $15.8 trillion up from $6.1 trillion in 2019. Additionally, CoreLogic notes that home flipping has increased significantly since the recession, reaching its highest point 11.4% in 2018.
The number of homes underwater dropped by over 21 percentage points to 4.1% in the first quarter of 2019, while the biggest drop (6.2%) occurred between 2012 and 2013 when the share of homes with negative equity went from 22.4% to 15.5%, driven in part by a 10.2% rise in home prices.
“Home prices have increased steadily since 2011, creating record amounts
of home equity and putting homeowners in a good position to weather future downturns,” said Molly Boesel, Principal Economist, CoreLogic.
According to CoreLogic, concerns over an imminent recession have been rising as the economy continues to progress. In the housing economy, while home prices are still growing, they are
doing so at a slower pace. Home prices increased just 3.6% year over year in May 2019, down from 4.1% in January. Additionally, housing starts in May 2019 underperformed, dropping 0.9% below the revised April estimate.
“We expect the housing market to enter a normalcy phase over the next 24 months,” said Ralph McLaughlin, Deputy Chief Economist. “With prices neither rising too fast nor too slow, and with a growing stream of young households looking to buy homes over the next two decades, the long-term view looks healthy.”