Homeowner’s equity has gone up, according to a recent study. The CoreLogic Homeowner Equity Insights for Q2 2018 revealed that equity for homeowners with mortgages has increased by 12.3 percent, or by $981 billion since the second quarter 2017.
“Homeowner property values continued to increase in value this quarter with homeowners gaining an average of $16,200 in home equity wealth,” said Frank Nothaft, Chief Economist for CoreLogic. “When aggregated across all homeowners, that totals almost $1 trillion in gains in home equity wealth. This wealth gain will support additional consumption spending and home improvement expenditures in coming years.”
Additionally, the total number of mortgaged residential properties with negative equity, borrowers who owe more on their mortgages than their homes are worth, went down by 20.1 percent, from 2.8 million homes in Q2 2017 to 2.2 million in Q2 2018. The national aggregate value of negative equity was approximately $279.8 billion in Q2 2018.
“Negative equity levels continue to drop across the U.S. with the biggest declines in areas with strong price appreciation,” said CoreLogic President and CEO Frank Martell. “Further, the relatively low level of shadow inventory contributes to the chronic shortage of housing supply and price increases in many markets.”
Despite these increases, many Americans are still hesitant to tap into their equity. However, as Dr. Nothaft noted, these equity gains do mean more money put back into homes for improvement. Bankrate.com found that three-quarters of homeowners say that making home improvements or repairs is a good reason to withdraw cash from their home equity. Still, less homeowners are willing to use home equity loans or home equity lines of credit. Bankrate CFA Greg McBride states that increasing debt among homeowners may mean more Americans will tap into their home equity.
“With the sorry state of emergency savings and increasing levels of consumer debt in a rising interest rate environment,” McBride says, “it’s a matter of ‘when’ not ‘if’ more homeowners turn to home equity to fund home improvements and repairs, or consolidate debt.”