Negative Equity Alert As US Homeowners Lose $108.4 BILLION In Equity This Year Alone. 200,000 Homeowners At Risk Of Going ‘Underwater’
MFI-Miami has issued a Negative Equity Alert! Why? Homeowners are sitting on a negative equity timebomb. US home values have dropped a whopping $108.4 billion in 2023 alone.
The average borrower saw their home equity plummet by $5,400 in the first quarter of 2023. Households in Washington, California and Utah worst affected.
In the event that prices tumble by 5% with another 200,000 households, the US could be facing another negative equity problem.
Falling into negative equity can make it difficult to sell or refinance a home – leaving many feeling trapped in their property. The issue exploded during the 2008 financial crash.
And now borrowers face a similar issue. Red-hot property market of the last two years begins to cool. This while mortgage rates reach an eight-month high of 6.81 percent.
CoreLogic data found that across the board, homes lost 0.7% of their value this year.
Homes in western states lost between $37,700 and 74,300.
However, some areas saw substantial gains in equity. In Maine, homeowners added $23,000 to their properties.
The disparity was attributed to the unique housing market conditions in each area.
Analysts at CoreLogic noted that, for now, the number of properties actually going into negative equity remains unchanged from 2022. What’s more the average homeowner now has more than $274,000 in home equity – up from $182,000 before the pandemic.
But the stability of homeownership is hinging on the property market stabilizing. The Core Logic Report estimates that if house prices decline by a further 5%, some 213,000 borrowers would slip into negative equity.
In May, data from Redfin suggested that some cities were seeing home values plummet by a staggering $220,000 from a year ago.
Yet, Fannie Mae adjusted its forecast for 2023 as it acknowledged house prices were falling at a slower rate than previously predicted.
