Homeowner Equity Jumps Over $2 Trillion in Q3

Homeowner equity jumped over $2 trillion in the second quarter of 2022. However, that was the smallest year-over-year increase since the first quarter of 2021, according to the CoreLogic Homeowner Equity Insight report.

• Y-O-Y: U.S. homeowners with mortgages have seen their equity increase by a total of over $2.2 trillion since Q3 of last year, a gain of 15.8% year-over-year. This was the smallest gain since the first quarter of 2021 (+$1.9T).

• Q-O-Q: The equity gain in Q3 was almost half the $3.6 trillion gain in the second quarter.

Homeowners. The average homeowner gained approximately $34,300 in equity during the past year. However, this was down from the $60K gain last quarter and the record $64k gain reported in the first quarter.

• The Q3 gain was the smallest gain since the first quarter of 2021 (+$33,400)

South FTW. Despite the slowdown in equity gains, the Southeast had a great year with Florida homeowners taking the top spot with an average gain of $77,000. North and South Carolina tied at number two at $48,000 followed by Georgia (+$47k) and Tennessee & Arizona (+$46k).

Negative Equity. For the first time since 2014, the share of mortgages with negative equity rose quarter-over-over. In the third quarter of 2022, the total number of mortgaged residential properties with negative equity increased by 4% from the second quarter of 2022 to 1.1 million homes.

• The last time we saw an increase in negative equity was between the 2nd and third quarter of 2014 when the share rose from 10% to 11% of total mortgages in a negative equity position.

• On a year-over-year basis, negative equity fell by 9.8% from 1.2 million homes, or 2.2% of all mortgaged properties, in the third quarter of 2021.

Analysis. Selma Hepp, Chief Economist at CoreLogic, said despite the slowdown homeowners are sitting on a ton of equity. “Weakening housing demand and the resulting decline in home prices since the spring’s peak reduced annual home equity gains and pushed an additional number of properties underwater in the third quarter. Nevertheless, while these negative impacts are concentrated in Western states such as California, homeowners with a mortgage there still average more than $580,000 in home equity.”