Home Equity Regains $2 Trillion

At the end of the third quarter, the equity Americans have in their homes continues to rise higher than at it was at the onset of the housing crash five years, according to the December HUD Scorecard.

Homeowners’ equity reached $7714.3 billion, a 5.2 percent increase over the second quarter and an 18 percent increase over the level of $6526.9 in the third quarter of 20011. In 2007, homeowners’ equity reached $1.02 trillion, but fell to $7050.9 billion in 2008, according to the quarterly Federal Reserve Flow of Funds report.

CoreLogic previously reported that as of the second quarter, improving equity helped the number of underwater homeowners fall to 10,779,000, a 5.2 percent decline from the first quarter and 8.1 percent less than a year ago. About 22.3 percent of all homes with mortgage owed more on their homes than those properties are worth. That was an improvement from the first quarter, when there were about 11.4 million underwater homes, amounting to about 23.7 percnet of all mortgaged homes. The number of underwater homeowners in the third quarter has not yet been reported.

The equity Americans have in their homes is nearing $8 trillion, still well below the nearly $14 trillion in equity that existed before the housing downturn but is nearly $2 trillion above the trough it reached in the first quarter of 2009.

Home equity in the first quarter of 2012 rose to $6.7 trillion, the highest level since 2008, as homeowners taking advantage of record-low borrowing costs to refinance their loans brought cash to the table to pay down principal. The 7.3 percent gain was the biggest jump in more than 60 years at that time, according to an analysis of Federal Reserve data.

Measured as a share, rather than in dollars, homeowner equity was 41 percent of U.S. residential property value in the first quarter, including homeowners who don’t have mortgages. The last time the share was that high was in the third quarter of 2008 when it was 43 percent.