It’s been 6 years since the height of the housing crisis. Since then, 9 million home loan borrowers have regained equity in their homes. These facts remain important as we look for indicators for how the current economy is performing. Home equity is a large chunk of homeowner wealth, and supports spending and broader economic health. CoreLogic®, who collects and maintains arguably the largest, most comprehensive property and financial databases in the U.S., reports a $766 billion increase in home equity in the first quarter of 2017, the largest since the second quarter of 2014, with all states showing gains.
Current State of Equity
The first quarter equity gain is attributed to rising home prices. 91,000 residential properties regained equity in this timeframe bringing the current total to 48.2 million. 3.1 million remain in negative equity. If home prices rise another 5 percent, another 600,000 properties will regain equity.
Still Room for Improvement
Borrowers with less than 20% equity are considered under-equitied. Though properties continue to regain equity, not all properties are at the level of home equity where mortgage risk is low. 51 million or 15.1% of all residential properties with mortgages are considered under-equitied.
Where is the most equity found? In the homes located in the higher end of the real estate market. 96% of homes valued above $200,000 have equity as compared to 90% of homes valued below $200,000. And the upper market isn’t just showing concentrated gains in equity. Nationwide, the average Loan-to-Value ratio (LTV) for residential properties with mortgages is 55.3%. The higher the ratio, the higher the risk to the lender. In the upper price ranges, the LTV tends to be on the lower end of the spectrum.
Of course, people can argue that incomes for upper market properties are also higher and people buying there can often afford larger down payments and properties that better retain value.
How does North Carolina compare to the rest of the United States? The average LTV in North Carolina is 60.9%. and only 16.6% falls in the upper 80%-100% range. The average equity share nationwide is 93.9% and North Carolina’s is 95.7%. The national average negative equity share is 6.1%. In North Carolina, it’s only 4.3%. So, while our LTV is above the national average, our residential properties average more equity.
Want to download CoreLogic’s® First Quarter 2017 Equity Report? You can do so here.
Monitor Your Equity
The amount of equity in your home is directly affected by your home’s fair market value. Because your property is not only a home, but an investment, it’s a good idea to track your equity. Your mortgage statement can give you insight into the equity you gain by paying down your loan, but our automated Home Valuation tool can help you track your home’s fair market value, which may very well be higher than your current mortgage. It’s instant and free, and will compare your home’s features to others that have recently sold in the area.
Later on, if you feel yourself getting serious about taking the steps needed to get your home on the market, you can schedule an in-person home valuation with one of our listing specialists. Automated valuation tools can’t see your home: they estimate values by comparing data in public records. With an in-person home valuation, one of our listing specialists will walk through your home and take into consideration condition and other factors not easily seen by a computer. Let us know if there’s anything we can help you with today!