Home-equity wealth reached a new nominal high this year: $13.9 trillion at mid-2017, $0.5 trillion above the 2006 peak and more than double the $6.0 trillion amount at the trough of the Great Recession. While several factors will affect aggregate home equity, it’s clear that much of the recovery in home-equity wealth is due to the rebound in home values.
Home-value growth has also restored net worth to many homeowners who had negative equity. At the end of 2009, 12.2 million homeowners had negative equity, or 26% of all owners with a mortgage. Price appreciation, along with amortization and lower curtailments, has helped pull “underwater” owners above water.
We are forecasting a 5% rise in the CoreLogic Home Price Index over the next year. If all homes rise in value by this amount, about 500,000 homeowners will regain a positive net housing wealth position.
Source: Dr. Frank Nothaft, Chief Economist, CoreLogic, The MarketPulse, November 2017