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35 » VISIT US ONLINE @ DSNEWS.COM THE RISE OF HOMEOWNER EQUITY Homeowners saw their equity increase year over year while negative equity declined, according to the latest CoreLogic Homeowner Equity Insight report. CoreLogic states that U.S. homeowners with mortgages have seen their equity increase by nearly $485.7 billion since the first quarter of 2018, a 5.6% year over year increase. ough negative equity rose during that time as well, it is still down since 2017. CoreLogic data applies only to homes with mortgages, with non-mortgaged properties excluded. "Our forecast for the CoreLogic Home Price Index predicts there will be a 4.5% increase in our national index from December 2018 to the end of 2019," said Frank Nothaft, Chief Economist at CoreLogic. "If all homes experience this gain, this would lift about 350,000 homeowners from being underwater and restore positive equity." e national value of negative equity was up quarter over quarter by approximately $2.5 billion, up to $304.4 billion at the end of the first quarter of 2019. Meanwhile, the total number of mortgaged residential properties with negative equity decreased by 1% from Q 4 2018 to 2.2 million homes. "e country continues to experience record economic expansion as illustrated by these significant increases in home equity, said Frank Martell, President and CEO of CoreLogic. "Albeit more slowly than in recent years, we do expect further increases in home equity to occur across the nation in 2019." On average, homeowners experienced a $6,400 increase in equity year over year in Q1 2019. By state, Nevada experienced the highest year over year increase in home equity, with the average increase at $21,000. By metro, CoreLogic called the San Francisco-Redwood City-South San Francisco area the "least challenged" metro, with a negative equity share of all mortgages at 0.67%. Los Angeles saw similar low negative equity shares, at 1.5%. Meanwhile, Miami and Chicago saw higher negativity equity shares of 10% and 8.7%, respectively. ANOTHER HOUSING BUBBLE AHEAD? Research from the Black Knight indicates that the current demand for houses is primarily driven by families seeking to purchase homes and not by speculators, which, according to the Urban Institute, means that we are at less risk of entering a housing bubble. Urban Institute's analysis of Black Knight's house price index (HPI) reveals that home prices appear to be losing momentum. In comparison, during the last housing bubble, growth in the investment component of HPI was more substantial, "reflecting reckless lending and speculative homebuying," said Andrew M. Neal, Urban Institute Senior Research Associate. "Investment-driven demand for housing returned in 2012 as buyers with strong credit profiles and deep pockets snapped up millions of foreclosed homes at rock-bottom prices," Neal said. "Not surprisingly, peak growth of the investment component in 2013 (4.2%) far outpaced the consumption component (2.2%), although to a lesser extent than during the bubble." Home prices slowed from 6.8% year over year growth in February 2018 to 3.6% in March, while home prices have hit historic highs in nominal terms. is means the return for investment for homeowners has been small, and a family buying a home at today's prices will do slightly better. However, they shouldn't expect outsize equity gains. Neal notes that with these trends in mind, potential homeowners making the move to ownership need to consider the full cost of owning versus renting, including maintenance costs, taxes and insurance, and foregone interest on the down payment. ey should also note that homeownership provides a hedge against future housing inflation or rent increases. "More importantly, these data should comfort those worried about another housing market crash," said Neal. "Compared with the 2005–2007 bubble, when the HPI was driven mostly by speculative buying, the HPI today is driven mostly by families wanting to buy homes to live in."

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