American homeowners are finding that rising home prices are helping them reclaim some of the equity lost during the housing crisis, CoreLogic reports.
The value of homes, since the bursting of the housing bubble in 2007, have been struggling to regain the prominence homeowners once enjoyed in the days prior to the crisis. According to CoreLogic’s second quarter Equity Report, prices are rapidly moving towards pre-crisis levels, which could indicate a return to normalcy.
In Chicago, CoreLogic researchers found that the city’s average loan-to-value ratio is maintaining healthy levels at 65.5 percent, slightly below the state’s overall average of 66 percent. Only 19 percent of the city’s 1.3 million mortgaged homes are struggling with an LTV over 80 percent, while even less (17.9 percent) have fallen into negative equity.
A Positive National Direction
Nationally, the report found several indicators that the overall market is beginning to find a sustainable balance. However, progress still needs to be made.
- Recent increases in home prices have allowed 946,000 homes to regain equity.
- Just over five million homes still have a mortgage in negative equity.
- Though a large number of homes remain in negative equity, the aggregate value of negative equity has decreased more than $38 billion since the first quarter of 2014.
People are Becoming Wealthier
The recent performance of the nation’s several regional housing markets have lead to increased optimism in the industry moving forward. CoreLogic President and CEO Anand Nallathambi said in the report that latest improvement should help to encourage more hesitant consumers take the leap into homeownership.
“Many homeowners across the country are seeing the equity value in their homes grow, which lifts the economy as a whole. With more and more borrowers regaining equity, we expect homeownership to become an increasingly attractive option for many who have remained on the sidelines in the aftermath of the great recession. This should provide more opportunities for people to sell their homes, purchase a different home or refinance an existing mortgage.”
Sam Khater, the group’s deputy chief economist, mimicked Nallathambi’s sentiments, saying that the improvement in borrow equity is evidence of the market ebbing in the right direction.
“Borrower equity is important because home equity constitutes borrowers’ largest investment segment and, as a result, is driving forward the rise in wealth for the typical homeowner,” he said.