Trends to Track – Home Prices and Equity Tick Higher

CoreLogic came out with its December report for home prices. They indicated that in December 2018, home prices climbed 4.7% from December 2017.

The CoreLogic HPI report projects that a future home price growth for 2019 is expected to be 4.6%; this rise comes despite the slowdown in the number of homes purchased and higher mortgage rates.

The ATTOM report was published, indicating that home equity for America’s 14.5 million properties increased significantly. The report showed that in the fourth quarter of 2018, 25.6% of all properties with a mortgage reviewed as equity rich.

The report also indicates that 834,000 more homes were considered to be equity rich, increased from the prior-year period.

The ATTOM Data Solutions report also reflected that 5 million U.S. properties were seriously underwater.

This designation is determined when the combined estimated balance of loan secured by the property is at least 25% higher than the property’s estimated market value. The total number of homes seriously underwater equaled 8.8% of all U.S. properties. The percentage of property seriously underwater has fallen from the fourth quarter of 2017, when 9.3% of all properties in the United States were seriously underwater.

As homeowners remain in their current homes longer, the homeowner equity is expected to continue to increase and appreciate. As those individuals who are seriously underwater or just underwater remain in their homes, they come closer to breaking even as the market continues to stabilize and strengthen from the crash of 2008.

The report showcases the percentage of homes with the highest share of home equity are on the West Coast, while those homeowners in the South and Midwest continue to claw their way back to even.

To gain a perspective on the appreciation of home values and those properties that are seriously underwater, we can look at the first quarter of 2012 when, according to the ATTOM report, 12,533,235 homes were seriously underwater. This represented 27.8% of all homes in the United States.

Within just two years that number of seriously underwater homes dropped to 9,065,741 or 17.5% of all homes.

The fourth quarter of 2018 measured just 5,001,482 homes that were seriously underwater and 14,566,363 that were equity rich, representing 25.6% of all homes.

“Among 7,590 U.S. zip codes with at least 2,500 properties with mortgages, there were 27 zip codes where more than half of all properties with a mortgage were seriously underwater, including zip codes in the Chicago, Cleveland, Saint Louis, Atlantic City, Detroit and Virginia Beach metropolitan statistical areas. The top five zip codes with the highest share of seriously underwater properties were 08611 in Trenton, New Jersey (70.3 percent seriously underwater); 63137 in Saint Louis, Missouri (64.8 percent); 60426 in Harvey, Illinois (62.3 percent); 38106 in Memphis, Tennessee (60.5 percent); and 61104 in Rockford, Illinois (59.6 percent),” reported ATTOM Data Solutions.

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