US homeowners saw first equity loss since 2012 last quarter

THE cooling housing market is making a dent on the equity wealth US homeowners accumulated during the pandemic. 

Owners with a mortgage lost a small amount of equity last quarter – down 0.7 per cent from a year earlier – marking the first annual decline since 2012, according to property data provider CoreLogic. The drop amounted to an average of US$5,400 per borrower.

But home-equity changes varied widely across regions. Western states posted the biggest losses, led by Washington, California and Utah.

In the San Francisco area, the typical homeowner experienced equity loss of US$174,000 year over year.

By contrast, owners in six states, including Florida, Connecticut and New Jersey, increased their equity positions by US$20,000 or more, on average.

Among the 46 states and the District of Columbia with available data, only 15 states had a loss from a year ago. 

Despite the recent declines, home equity remains solid nationally, thanks to the cushion of wealth built during the boom years of the pandemic, according to the report.

The average homeowner today has more than US$274,000 in equity – up from US$182,000 before Covid-19.

And home prices have started to rise again in the past couple of months, after declining in the second half of 2022.

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“While homeowners in some areas of the country who bought a property last spring have no equity as a result of price losses, forecasted home price appreciation over the next year should help many borrowers regain some of that lost equity,” Selma Hepp, CoreLogic’s chief economist, said in the report. BLOOMBERG