“Homeowner equity reached $8 trillion in the second quarter of 2017, which is more than double the level just five years ago,” said Frank Martell, president and CEO of CoreLogic. “The rapid rise in homeowner equity not only reduces mortgage risk but also supports consumer spending and economic growth.”

Rising equity also helps those who are in a “near-negative equity” position, meaning they have some equity in their homes but not enough to cover the cost of buying new homes, or even the cost of moving to rental homes. Close to 710,000 properties have less than 5 percent equity.

Negative equity is one of the main reasons why there are so few homes for sale. Housing inventory dropped again in August, down over 6 percent compared with a year ago, according to the National Association of Realtors.

“Given the strength of the job market, favorable demographics and rock-bottom mortgage interest rates that make buying a home very affordable, the existing home sales market should be roaring instead of whimpering,” Svenja Gudell, Zillow’s chief economist, wrote in reaction to the weak August home sales report from the Realtors. “All those factors that should be acting as tailwinds may all be present, but they’re being overwhelmed by the simple fact that there are just very few homes actually available to buy.”

Gudell notes that half of the available supply of homes for sale is in the highest third of the market, which is not where demand is strongest.

The negative-equity situation, like everything else in real estate, differs depending on the local market. Markets with the highest share of negative equity on mortgage properties are Miami (14.7 percent), Las Vegas (12.2 percent), Chicago (10.8 percent) and the Washington, D.C., metro area (7.2 percent).

Facebook Comments