US homeowners rack up $2.2 trillion in equity
US homeowners with mortgages racked up a collective gain of $2.2 trillion in the third quarter, data from CoreLogic’s Homeowner Equity Report (HER) showed.
Home equity gains grew at a 15.8% year-over-year pace for an average of $34,300 per borrower in Q3. However, this is a significant slowdown from the second quarter’s nearly $60,000 year-over-year gain due to the home price correction seen in recent months.
According to CoreLogic, the annual price appreciation fell from roughly 18% in June to 10% in October. Home price appreciation is projected to fall into single digits for the rest of the year and possibly move into negative territory by the spring of 2023.
“At 43.6%, the average US loan-to-value (LTV) ratio is only slightly higher than in the past two quarters and still significantly lower than the 71.3% LTV seen moving into the Great Recession in the first quarter of 2010,” said Selma Hepp, interim lead of the Office of the Chief Economist at CoreLogic. “Therefore, today’s homeowners are in a much better position to weather the current housing slowdown and a potential recession than they were 12 years ago.”
Annually, the number of borrowers with negative equity increased by 4% to 1.1 million homes of 1.9% of all mortgaged properties. If home prices decline by 5%, approximately 172,000 homes would fall underwater.
“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,” said Hepp. “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.”