• Smallest quarter-to-quarter decline in negative equity since economic recovery began in 2010
• Homeowners had an average annual home equity gain of $12,400 in the third quarter of 2018, the smallest annual increase in eight quarters
• The annual equity gain in the national CoreLogic Home Price Index slowed to 5.4 percent in September, compared with 6.2 percent in June, reflecting slowing price growth

IRVINE, Calif. — (BUSINESS WIRE) — December 6, 2018 — CoreLogic^® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released the Home Equity Report for the third quarter of 2018. The report shows that U.S. homeowners with mortgages (which account for roughly 63 percent of all properties) have seen their equity increase by 9.4 percent year over year, representing a gain of nearly $775.2 billion since the third quarter of 2017.

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CoreLogic Q3 2018 Negative Equity Share for Select Metropolitan Areas (Graphic: Business Wire)

Additionally, the average homeowner gained $12,400 in home equity between the third quarter of 2017 and the third quarter of 2018. While home equity grew in almost every state in the nation, western states experienced the most significant increases. California homeowners gained an average of approximately $36,500 in home equity, and Nevada homeowners experienced an average increase of approximately $32,600 in home equity (Figure 1).

From the second quarter of 2018 to the third quarter of 2018, the total number of mortgaged homes in negative equity decreased 4 percent to 2.2 million homes or 4.1 percent of all mortgaged properties. Year over year, the number of mortgaged properties in negative equity fell 16 percent from 2.6 million homes – or 5 percent of all mortgaged properties – in the third quarter of 2018.

“On average, homeowners saw their home equity increase again this quarter but not nearly as much as in previous quarters,” said Dr. Frank Nothaft, chief economist for CoreLogic. “During the third quarter, homeowners gained an average of $12,400 compared to the second quarter when the average home equity wealth increase was more than $16,000. This lower year-over-year gain reflects the slowing in appreciation we’ve seen in the CoreLogic Home Price Index.”

Negative equity, often referred to as being underwater or upside down, applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in a home’s value, an increase in mortgage debt or both. Negative equity peaked at 26 percent of mortgaged residential properties in the fourth quarter of 2009, based on the CoreLogic equity data analysis which began in the third quarter of 2009.

The national aggregate value of negative equity was approximately $281.6 billion at the end of the third quarter of 2018. This is down quarter over quarter by approximately $1.1 billion, from $280.5 billion in the second quarter of 2018 and down year over year by approximately $2.7 billion, from $279 billion in the third quarter of 2017.

“The number of homes in a negative equity position have remained around 2.2 million for two consecutive quarters this year,” said Frank Martell, president and CEO of CoreLogic. “Without equity, those homeowners are unable to sell their homes and are more likely to transition from delinquency to foreclosure if they face financial distress.”

For ongoing housing trends and data, visit the CoreLogic Insights Blog: https://www.corelogic.com/insights-index.aspx.

Methodology

The amount of equity for each property is determined by comparing the estimated current value of the property against the mortgage debt outstanding (MDO). If the MDO is greater than the estimated value, then the property is determined to be in a negative equity position. If the estimated value is greater than the MDO, then the property is determined to be in a positive equity position. The data is first generated at the property level and aggregated to higher levels of geography. CoreLogic data includes more than 50 million properties with a mortgage, which accounts for more than 95 percent of all mortgages in the U.S. CoreLogic uses public record data as the source of the MDO, which includes both first-mortgage liens and second liens, and is adjusted for amortization and home equity utilization in order to capture the true level of MDO for each property. The calculations are not based on sampling, but rather on the full data set to avoid potential adverse selection due to sampling. The current value of the property is estimated using a suite of proprietary CoreLogic valuation techniques, including valuation models and the CoreLogic Home Price Index (HPI). In August 2016, the CoreLogic HPI was enhanced to include nearly one million additional repeat sales records from proprietary data sources that provide greater coverage in home price changes nationwide. The increased coverage is particularly useful in 14 non-disclosure states. Additionally, a new modeling methodology has been added to the HPI to weight outlier pairs, ensuring increased consistency and reducing month-over-month revisions. The use of the enhanced CoreLogic HPI was implemented with the Q2 2016 Equity report. Only data for mortgaged residential properties that have a current estimated value are included. There are several states or jurisdictions where the public record, current value or mortgage data coverage is thin and have been excluded from the analysis. These instances account for fewer than 5 percent of the total U.S. population. The percentage of homeowners with a mortgage is from the 2016 American Community Survey. Fourth quarter of 2017 data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.