Inman News

Equity is expanding, and foreclosures are shrinking.

From the fourth quarter of 2017 to the fourth quarter of 2018, borrower equity grew by 8.1 percent, or a collective $678.4 billion, while delinquencies fell to their lowest in nearly 20 years, according to CoreLogic’s home equity and loan performance reports.

From Dec. 2017 to Dec. 2018, delinquencies dipped to 4.1 percent of mortgages nationwide, while the foreclosure inventory rate sank to 0.4 percent.

For the average homeowner, the boost equaled $9,700 in equity.

“With additional ‘skin in the game,’ rising equity reduces the chances of a foreclosure, helping to push the foreclosure rate down to its lowest level since at least 2000,” explains Dr. Frank Nothaft, chief economist at CoreLogic. 

From the third quarter of 2018 to the fourth quarter of 2018, 35,000 more homeowners were underwater, the loan performance report shows—but according to Frank Martell, CEO and president of CoreLogic, borrowers are capitalizing on their equity to make renovations, not textbook “underwater.”

“As home prices rise, significantly more people are choosing to remodel, repair or upgrade their existing homes,” Martell says. 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.”

The bigger picture? From the fourth quarter of 2017 to the fourth quarter of 2018, the amount of homeowners who were overleveraged tumbled by 14 percent.

“Our forecast for the CoreLogic Home Price Index predicts there will be a 4.5 percent increase in our national index from Dec. 2018 to the end of 2019,” Nothaft says. “If all homes experience this gain, this would lift about 350,000 homeowners from being underwater and restore positive equity.”