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Home Equity is on the Rise
The increase in equity will also help those who are underwater on their homes.
Homeowners with loans on their houses increased their equity by an average $9,700 between the fourth quarter of 2017 and one year later. Data from CoreLogic reveals that western states gained the most, although most states posted an increase. The increase in home equity over the past several years provides homeowners with the means to finance home remodels and repairs,” said Frank Martell, president and CEO of CoreLogic. “With rates still ultra-low by historical standards, home-equity loans provide a low-cost method to finance home-improvement spending. These expenditures are expected to rise 5% in 2019.” But for 35,000 of these homeowners, the fourth quarter of 2018 saw them added to those who owe more than their home is worth.
The total number of underwater homes rose 1.6% quarter-over-quarter to 2.2 million, a 4.2% share of all homes with financing. The figures show that negative equity rose on a quarterly basis for the first time since Q4 2015 but on an annual basis there was a 14% decline (351,000) in underwater homes for a total of 2.6 million homes, or 4.9% of all homes with a home loan. Despite the rise in quarter-over-quarter negative equity, the outlook is positive and could see hundreds of thousands of owners regaining equity. “Our forecast for the CoreLogic Home Price Index predicts there will be a 4.5% increase in our national index from December 2018 to the end of 2019,” said Dr. Frank Nothaft, chief economist for CoreLogic. “If all homes experience this gain, this would lift about 350,000 homeowners from being underwater and restore positive equity.”
Source: Mortgage Professional America
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Note: The answer to rising home prices and rents? Buy now as a home provides inflation protection!
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