The slow erosion in first-quarter home equity from a year ago equates to a four-figure decline in house value, according to Cotality's latest numbers.
The new Cotality study, which follows
During the equivalent period in the fourth quarter, the average homeowner experienced a $4,300 gain.
While those numbers don't tell the whole story given that many other data points indicate home equity levels are historically strong, 12-month comparisons are telling because they adjust for seasonal variations and can point to longer-term trends.
Why home equity is still high but the average value fell
While the share of total underwater mortgages in the market rose 17% because of the aforementioned declines, just 2.1% of all homes are in this category. Although the average house did lose a few thousands of dollars in value, it still has $302,000 in equity left.
The current negative equity or underwater mortgage share is a far cry from when it peaked at 26% in the fourth quarter 2009, according to Cotality data.
In addition, while the average homeowner lost value between the first quarter of last year and this one, total equity in the market actually rose on a net basis, inching up by 0.7% or $115 billion to more than $17.3 trillion for mortgage borrowers, according to Cotality.
When asked about the discrepancy between the net gain in total equity and the decline for the average home equity, Hepp said in an email that the difference reflects changes in the loan-to-value ratios of outstanding real-estate secured lending in the market over time.
Over 1.16 million mortgaged properties have been added to the market since the first quarter of last year, and these have higher average LTVs than outstanding home loans.
"So the total increase (up $115 million) gets spread over more properties than last year, which makes the total average equity per borrower lower," she explained.
What happened to home values varied by region
While there was a loss in value for the average household, whether or not any particular home experienced one depended a lot on its location.
"Geographical differences are important here as the national average is being pulled down by weakening markets in the South — particularly in Texas and Florida — that are masking strong equity growth in the Northeast," Cotality Chief Economist Selma Hepp said in a press release.
Changes in values in the state level were in the five figures when it comes to the largest declines and increases. Averages in Rhode Island and New Jersey were up $36,500 and $35,700, respectively. The averages in Hawaii and Florida fell $65,900 and $26,300.
Over half of all states experienced losses in home value.
The impact of a past boom, home equity loans and prices
Other drivers to keep in mind when looking at over trends is the extraordinary housing boom at the start of the decade, which is fading further into the rearview mirror, leading to a relative slowdown in what's been a more normalized market since then.
"At the peak of home price gains, annual equity increases surged to as much as $55,000. However, with price increases slowing considerably and appreciation remaining sluggish, home equity is unlikely to accumulate at the same pace as it did," Hepp said.
"In addition, recent declines also reflect that some homeowners are
Home price forecasts generally suggest unadjusted housing values will continue to rise, buoying national equity levels to some degree, but many measures suggest
