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Thursday, September 23, 2021

CoreLogic: 1.2 Million Homes with Negative Equity in Q2 2021

by Calculated Risk on 9/23/2021 09:33:00 AM

From CoreLogic: Homeowners Gained $2.9 Trillion in Equity in Q2 2021, CoreLogic Reports

CoreLogic® ... today released the Homeowner Equity Report for the second quarter of 2021. The report shows U.S. homeowners with mortgages (which account for roughly 63% of all properties) have seen their equity increase by 29.3% year over year, representing a collective equity gain of over $2.9 trillion, and an average gain of $51,500 per borrower, since the second quarter of 2020.
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“The growth in homeowner equity provides a strong financial cushion for tens of millions Americans. For those most impacted by the pandemic, equity gains will help play a critical role in staving off foreclosure,” said Frank Martell, president and CEO of CoreLogic. “Based on projected increases in economic activity and home values over the next year, we expect to see further gains in equity and a corresponding drop in negative equity, forbearance rates and foreclosure.”
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Negative equity, also referred to as underwater or upside down mortgages, applies to borrowers who owe more on their mortgages than their homes are currently worth. As of the second quarter of 2021, negative equity share, and the quarter-over-quarter and year-over-year changes, were as follows:

• Quarterly change: From the first quarter of 2021 to the second quarter of 2021, the total number of mortgaged homes in negative equity decreased by 12% to 1.2 million homes, or 2.3% of all mortgaged properties.

• Annual change: In the second quarter of 2020, 1.8 million homes, or 3.3% of all mortgaged properties, were in negative equity. This number decreased by 30%, or 520,000 properties, in the second quarter of 2021.

• The national aggregate value of negative equity was approximately $268 billion at the end of the second quarter of 2021. This is down quarter over quarter by approximately $5.2 billion, or 1.9%, from $273.2 billion in the first quarter of 2021, and down year over year by approximately $18.9 billion, or 6.6%, from $286.8 billion in the second quarter of 2020.
emphasis added
Click on graph for larger image.

This graph from CoreLogic compares Q2 to Q1 2021 equity distribution by LTV. There are a few properties with LTV over 125%.  But most homeowners have a significant amount of equity.  This is a very different picture than at the start of the housing bust when many homeowners had little equity.

On a year-over-year basis, the number of homeowners with negative equity has declined from 1.8 million to 1.2 million.