The high potential of residential real estate as an investment continues to be borne out by statistics, with US homeowners adding a cool $1.3 trillion to their home equity in 2023.
The CoreLogic Homeowner Equity Insights report reveals that in the fourth quarter of 2023, US homeowners with a mortgage – around 62% of all properties – saw equity rise by an aggregate 8.6% year-over-year. Baby boomers, who tend to have been in their homes for longer periods, have seen significant increases in their home equity.
Meanwhile, the share of those homes that are in negative equity fell 1.1% quarter-over-quarter to 1.8% of all mortgaged properties, around 1 million homes. Negative equity properties were down 15% year-over-year.
Those with equity gains were led by Rhode Island ($62,000), New Jersey ($55,000) and Massachusetts ($53,000), with the first two showing the largest year-over-year price appreciation in 2023 at 13.2% and 11.6% respectively.
The national annual average gain in home equity in the fourth quarter of 2023 was $24,000 but in the three Northeastern leaders this was above $50,000. Only Texas posted an annual equity loss (of $6,000).
“Rising home prices continue to fuel growing home equity, which, at $298,000 per average borrower remained near historic highs at the end of 2023,” said Selma Hepp, chief economist for CoreLogic. “By extension, at 43%, the average loan-to-value ratio of US borrowers has also remained in line with record lows, which suggests that the typical homeowner has notable home equity reserves that can be tapped if needed.”
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