Homeowners are getting richer thanks to the rise in home prices, CoreLogic says in its latest Home Price Index and HPI Forecast. The housing market analyst firm claims that homeowner equity has almost doubled in the past five years, and will continue to increase going forward.
"Home equity wealth has doubled during the last five years to $13 trillion, largely because of the recovery in home prices," said Frank Nothaft, chief economist for CoreLogic. "Nationwide during the past year, the average gain in housing wealth was about $11,000 per home owner, but with wide geographic variation."
Some markets are seeing much more growth than others however, with California, Washington, Oregon, Colorado and Utah seeing double-digit home price gains.
And, CoreLogic reckons that home prices will continue to rise and result in further increases in home equity in the coming months.
The CoreLogic HPI Forecast shows that home prices will rise by 5.2 percent on a year-over-year basis from September 2016 to September 2017, with rises of 0.3 percent on a month-by-month basis from September 2016 to October 2016. CoreLogic derives its forecasts from a projection of home prices using the CoreLogic HPI and other economic variables, it says. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households in each state.
“Home-price growth creates wealth for owners with home equity,” said Anand Nallathambi, president and CEO of CoreLogic. “A 5 percent rise in home values over the next year would create another $1 trillion in home equity wealth for home owners.”