Homeowners nationwide saw an average gain in equity of $11,000 last year, while in states such as California, Oregon and Washington, equity increased an average of nearly $30,000 per person.
Since 2011, the value of the nation’s single-family housing market has increased 40 percent, with nationwide home equity doubling from $6.1 trillion to $12.7 trillion, according to data from CoreLogic, a data and analytics company.
That increase in equity has helped to rebuild the wealth of America’s homeowners.
“Across the U.S., the value of the housing stock and the amount of home-equity wealth held by homeowners have risen dramatically during the last five years,” said Frank Nothaft, CoreLogic’s chief economist, The recovery in home equity also “has helped support consumption spending and renovation expenditures.”
The national map on this page shows the breakdown of average equity gain per owner across the U.S.
CoreLogic predicts home equity will continue to make gains in the coming year, reaching $1 trillion, which will add to consumption spending and lead to greater economic growth in 2017.
As appreciation rises, the number is declining of homeowners with negative equity, those “under water” households that owe more on their home than it is currently worth. These owners are the lingering reminders of last decade’s devastating recession. As of mid-2016, an estimated 3.6 million homeowners – or about 7 percent – were saddled with negative equity.
Home prices have risen significantly throughout the nation since 2011, an increase of 40 percent rise in the national index, with some regions up more sharply and other markets showing a more subdued bounce back. The increase of home values has yielded a rise of home equity wealth for America’s homeowners. That means owners with equity can sell their home, repay the loan and walk away with cash in their pocket.
If a home is owned free and clear of a mortgage debt, then the entire value of a home is the owner’s home-equity wealth.
However, if the value of a home remains below the amount still owed on the home loan, then the owner has what is known as “negative equity.”
While estimates vary, Moody’s Analytics has estimated that for every $100 rise in housing wealth, consumption spending rises roughly $2.
In other words, a $6 trillion rise in housing wealth has lifted consumer spending by more than $100 billion during the last five years.
And renovation expenditures are up as well, further contributing to economic growth.
Dean Vincent is president of the Santa Clarita Valley Division of the 9,500-member Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.