A recently published CoreLogic report found homeowners with mortgages in the first quarter of 2022 saw their equity grow by 32.2% year-over-year.
According to the data vendor, the collective equity gain was $3.8 trillion in the first quarter, or an average gain of $63,600 per borrower. CoreLogic said homeowners with mortgages account for roughly 60% of properties in the nation.
Patrick Dodd, CEO of CoreLogic, said home equity grew in tandem with home prices, which were up by 20% in March, compared to a year earlier.
“This has led to the largest one-year gain in average home equity wealth for owners and is expected to spur a record amount of home-improvement spending this year,” Dodd said in a statement.
But $63,000 was just the average gain. Per the quarterly report, published this week, homeowners in California, Hawaii and Washington saw their equity increase by more than $100,000 in the first quarter of 2022 compared to the prior year.
The upward trajectory of home prices meant some 62,000 homeowners regained home equity compared with the previous quarter, according to CoreLogic. In another report published last month, CoreLogic said the explosive pace of home price appreciation will reverse course and will cool to single digits by March of next year.
Prioritizing home equity solutions in a rising rate environment
The 2022 housing market has been underscored by interest rate spikes and refi decline and lenders are working hard to adjust to new borrower trends. HousingWire recently spoke with Barry Coffin, managing director of home equity title/close at ServiceLink, about the ways lenders can capitalize on these trends by revving up their home equity solutions.
CoreLogic also found only 2% of homeowners with a mortgage “remained underwater” in the first quarter of 2022. The data vendor labels underwater mortgages as those with negative equity, in which a borrower owes more on their mortgage than their home is currently worth.
From the fourth quarter of 2021 to the first quarter of 2022, the total number of homes with negative equity dropped by 5.3% to 1.1 million homes, according to the report.
Year-over-year, the number of underwater mortgages dropped by 23%, or close to 300,000 properties. In the first quarter of 2021, 1.4 million homes — or 2.6% of all mortgage properties — were in negative equity, CoreLogic found.
The data vendor predicts borrowers with minimum equity gains around 5% are “most likely to move out of or into negative equity as prices change.”
If home prices increase by 5%, close to 130,000 homes would regain equity. However, if home prices plummet by 5%, 167,000 properties will would move into “underwater” territory,” according to the CoreLogic report.