Another sign of a market rebound? Home equity is back up
On average, U.S. homeowners gained nearly $14,000 in equity since the beginning of the year, though equity is down slightly from last year's peak.
- Nationally, home equity grew by $806 billion in the second quarter.
- However, equity fell 1.7% when compared to the same period a year ago.
- Homeowners in the Northeast and Midwest saw the biggest equity gains, while Washington and Idaho homeowners were the biggest losers.
Homeowners are in a better position today than they were earlier this year, according to CoreLogic's latest Homeowner Equity Insights report, which looks at home equity through the second quarter. The bad news? Equity still hasn't fully recovered compared to the same time a year ago.
According to the report, homeowners with mortgages — accounting for roughly 63% of all properties — saw their equity increase by $13,900, on average, between Q1 and Q2. This equates to a dramatic $806 billion gain in homeowner equity nationally. However, compared to the second quarter of 2022, the average homeowner has lost $8,300.
The data suggests a recovery in home values is well underway, due in part to a 5% increase in home prices since February, said Selma Hepp, chief economist for CoreLogic.
"While U.S. home equity is now lower than its peak in the second quarter of 2022, owners are in a better position than they were six months ago, when prices bottomed out," she said.
But with higher home values and sale prices come costlier mortgages. According to a Black Knight report released this week, the average monthly mortgage payment on a home with a 30-year fixed-rate loan hit its highest point ever in July at $2,306. And with elevated borrowing rates, it's also a risky time to take out a home equity loan.
As with any national report, the big picture perspective only tells a part of the story. Each region of the country has had a different experience with home equity gains or increases in the last quarter. The homeowners who have witnessed the biggest gains are in the Northeast and Midwest — which follows the same trend of other recent reports on home values.
Homeowners in New Jersey, Connecticut, Rhode Island, and New Hampshire all witnessed an average equity gain of $20,000 or higher in the last year. And those in Maine, Alaska, Wisconsin and Kansas saw a $10,000 or greater uptick in their home equity.
Much of the West, on the other hand, saw home equity plummet. The biggest losers were homeowners in Washington state and Idaho, where average homeowner equity plunged by over $50,000 in the last year. Montana, Colorado, Utah, Nevada, Arizona, and California all experienced drops of nearly $30,000 or more.
Despite the recent losses, however, the report noted that homeowners in several Western states including Hawaii, California and Washington still have high levels of equity overall due to the accelerated pace of appreciation in those areas over the past decade.