CoreLogic reported that home equity has grown to a new high.
According to the new report issued this November, home equity wealth reached a new nominal high this year, totaling $13.9 trillion at the midpoint of 2017. This represents a gain of half a trillion above the 2006 peak and more than double the amount at the point of the Great Recession.
Home value growth has also restored many homeowners’ net worth to positive equity. At the end of 2009 26% or 12.2 million homeowners had a mortgage with a negative equity position.
Price appreciation has been the primary reason that many owners are no longer under water with their mortgages.
CoreLogic is forecasting a 5% rise in the Home Price Index over the next 12 months. If that should occur there will be another 500,000 homeowners who will regain a positive net housing wealth position.
According to the current CoreLogic report, only 5.4% of all homeowners nationally, with a mortgage, had negative equity as of the mid-year 2017.
The new CoreLogic report indicates that as of July 2017, prices are nearly back to the 2006 level.
Bigger Monthly Payments
As home prices have risen between 5 and 6% over the last year, mortgage payments for the recent home buyers have also risen closer to 10%, according to the CoreLogic report.
According to the report the Home Price Index forecast projects that the median sale price will rise about 3% in real terms over 2017 to 2018.
Based upon these projections, the inflation-adjusted typical mortgage payment will rise from $816 this August 2017, to $908 by August 2018. This represents an 11.3% year-over-year increase.
Overvaluation
According to CoreLogic approximately half of the top housing markets in the US are overvalued currently. This calculation points to 24 out of the top 50 markets are overvalued.
Serious delinquency and foreclosure rates are at their lowest levels in more than a decade. This now points to the significance and importance of new construction in order to fill the gaps for new buyers entering the market.
CoreLogic projects New Jersey’s increase in home prices will be approximately 5.6% from 2017 to 2018.