TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/1322848
M R EP O RT | 41 SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T Added Value Home equity now reaches levels unseen since 2014. I t seems COVID-19 and its economic toll hasn't man- aged to crimp the housing industry as home prices parachute unabated and home equity grows, according to a report from CoreLogic.com. Between Q 3 2019 and Q 3 2020, cumulative equity gains hit $1 trillion, while average equity gains per homeowner ascended to $17,000, reaching their highest level since 2014. These equity buffers are likely key players as record- low foreclosures rates maintain their traction and should help shield families from additional financial quandaries over the next several months. Equity has spiked by 10.8% year over year among U.S. homeown- ers with mortgages—representing around 63% of all properties, the report shows. That's a collective equity surge of $1 trillion and an average acceleration of $17,000 per homeowner since the third quarter of 2019. Appreciation is also having a field day of sorts, touching its highest level since 2014 in the third quarter of the year, fueled by homebuyers as they continue to vie for the low supply of homes on the market, sending home equity to record levels. In fact, it's expected that equity will continue to make strides over the next several months, riding the tail of robust home-purchase demand, which should remain high and continue to boost prices. One caveat: as new home construction and more existing for-sale homes ease sup- ply pressures, the CoreLogic HPI Forecast shows a recession in home prices over the next 12 months. The number of mortgaged homes in negative equity dropped by 6.9% to 1.6 million homes, or 3% of all mortgaged properties, from the Q2 to Q 3 of 2020. Two million homes, or 3.7% of all mortgaged properties, were in negative equity in the third quarter of last year. That dropped off by 18.3% or 370,000 properties in the third quarter of the year to 1.6 million mortgaged properties in negative equity. "Over the past year, strong home price growth has created a record level of home equity for homeown- ers," said Dr. Frank Nothaft, chief economist for CoreLogic. "The av- erage family with a home mortgage loan had $194,000 in home equity in the third quarter. This provides an important buffer to protect families if they experience financial difficulties and is one reason for the generational-low in foreclosure rates reported in September." At the end of the Q 3 2020 the national aggregate value of negative equity was around $283.3 billion—down quarter over quar- ter by about $2.2 billion or 0.8%, from $285.5 billion in Q2 2020. Furthermore, it was down year over year by approximately $21.4 billion, or 7%, from $304.7 billion in the third quarter of 2019. Also, the Census Housing Vacancy and Homeownership Survey shows homeownership continued to climb during Q1 2020, and at 65.3%—the highest level in seven years. The increase, according to CoreLogic, was driven by the jump in homeown- ership among those 29-years-old and younger. Among the 20 cities studied by the Case-Shiller, Phoenix had the highest home-price growth accel- eration rate for the 10th consecutive month, with an annual increase of 8.16%. Seattle was close behind with an annual growth of 6.89%.