Home Equity Surges in Q1 2024, Adding $1.5 Trillion in Value

In the first quarter of 2024, home equity across the U.S. saw significant growth, with residential properties with mortgages collectively gaining $1.5 trillion in equity over the past year, as per a CoreLogic report released Friday.

During the year ending in March 2024, the average U.S. homeowner with a mortgage gained $28,000 in equity — the highest annual increase since late 2022. California, Massachusetts, and New Jersey led the charge with homeowners in these states seeing increases of $64,000, $61,000, and $59,000 respectively, more than double the national average.

This $1.5 trillion boost in home equity brought the total net equity of U.S. homes to over $17 trillion by the end of Q1 2024. Mortgaged properties account for 62% of all residential homes in the country, according to CoreLogic.

Selma Hepp, chief economist at CoreLogic, commented, “With home prices continuing to reach new highs, owners are also seeing their equity approach the historic peaks of 2023, close to a total of $305,000 per owner. Importantly, higher prices have also lifted some 190,000 homeowners out of negative equity, leaving only about 1.8% of those with mortgages underwater.”

Negative equity, where borrowers owe more on their mortgage than their home is worth, decreased by 2.1% in Q1 2024, now affecting just 1 million homes nationwide.

The report highlighted the volatile nature of underwater mortgages, which can fluctuate with changes in home prices. For instance, 111,000 homes could regain positive equity if home values increased by 5%, whereas a 5% decline could push 153,000 homes back underwater.

“Home equity is crucial for mortgage holders facing rising homeownership costs, including insurance, taxes, and HOA fees, as it provides a financial buffer,” Hepp added. “Moreover, low levels of negative equity are beneficial in markets with recent price weaknesses, such as Florida and Texas, where only 1.1% and 1.7% of homes are underwater respectively, below the national rate. Further price declines in these areas could erode homeowners' equity.”