According to CoreLogic’s recently published Home Equity Report, borrowing money to buy a home is paying off for homeowners these days. In 2017, homeowners with mortgages gained more than $15,000 in home equity, the highest growth in home equity in four years. That equates to a cumulative equity in mortgaged real estate of $908 billion, CoreLogic researchers observed.
Rising equity is not just good for individual homeowners. It is also a good thing for real estate investors who own portfolios of multiple properties and for those who sell homes on the retail market. Rising equity levels nationwide also mean that the number of properties underwater, or that have negative equity, is declining. In fact, fewer than one in 20 homeowners now owes more on their property than the property is worth, good news for consumer sentiment and for homeowners who have been wanting to sell but unable to do so because they could not pay off their mortgage loan. By comparison, more than a quarter of all homes were underwater in 2009.
Notably, three states saw an increase in underwater homes. New York, Oklahoma, and Louisiana all posted minute increases in the volume of underwater homes in their state markets. Miami, Florida, also posted troubling negative equity numbers, with a cumulative negative equity market share that is nearly three times the national average. Nevada, on the other hand, improved by 5.5 percent. In 2010, nearly three-quarters of the state’s homes were underwater, whereas, at present, that number is down to about two in every 25.
Investors should be aware of their individual market’s equity situation, since it affects how homeowners feel about buying and selling their properties. It also may affect a distressed seller’s options for selling at a discount and may affect how much you should plan to pay for a deal.
Investor Insight:
Homeownership is looking better than ever, and real estate investors can also benefit from rising home values.
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