Homeowners saw yet another increase in home equity in the fourth quarter of 2018, with rising home prices helping to boost their profits.
According to CoreLogic’s latest Home Equity Report published last week, U.S. homeowners with a mortgage saw equity gains of 8.1 percent year over year.
The average homeowner saw gains of $9,000 in home equity between the fourth quarter of 2017 and the same period in 2018, CoreLogic said. Some of the biggest gains were seen in the West, with Nevada homeowners averaging a $29,000 increase in equity in the last year. Hawaii homeowners also did well, with an average increase of $26,900.
“As home prices rise, significantly more people are choosing to remodel, repair or upgrade their existing homes,” said Frank Martell, president and CEO of CoreLogic. “The increase in home equity over the past several years provides homeowners with the means to finance home remodels and repairs. With rates still ultra-low by historical standards, home-equity loans provide a low-cost method to finance home-improvement spending. These expenditures are expected to rise 5 percent in 2019.”
The number of homes with a mortgage in negative equity—where the homeowner’s loan balance is higher than the home’s current worth—was at 2.2 million, or 4.2 percent of all mortgaged properties in the fourth quarter.
However, with predictions of a 4.5 percent increase in home prices over the next year, about 350,000 homeowners could be lifted from being underwater and restored to positive equity, says Frank Nothaft, CoreLogic’s chief economist.